KKR pulls out of Thames Water deal
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The news: Private equity giant KKR has dropped out of the Thames Water rescue deal, throwing the future of the UK’s largest water utility into question.
The numbers: KKR had been the preferred bidder to lead the company’s turnaround and had proposed to inject £4 billion ($8.4 billion) in equity into the utility.
Thames Water is currently drowning in roughly £19 billion in debt and was relying on the offer from KKR to secure its future. The utility, which currently serves around 16 million people in London and surrounds, secured court approval for a £3 billion emergency funding package in March.
Thames Water was fined £123 million last week for illegal sewage discharges.
The context: In a statement released by Thames Water on Tuesday, the company said that KKR indicated that it will “not be in a position to proceed, and its preferred partner status has now lapsed.”
The UK government has previously said that it would be prepared should Thames Water fail to recapitalise and need to enter temporary nationalisation to continue operating.
In mid-May, executives at Thames Water warned that it would need relief from fines imposed by regulators, which it estimated could reach as much as £900 million between 2025 and 2030.
What they said: Sir Adrian Montague, chairman of Thames Water, 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."
The sources: Thames Water statement, Reuters
