The future of UK's Thames Water depends on new PM, says CEO
Thames Water's Financial Crisis and Government Intervention
By Sarah Young
LONDON, July 15 (Reuters) - Thames Water's future now hinges on Britain's incoming Prime Minister Andy Burnham, with the utility set to run out of money by November unless creditors provide fresh funding, its chief executive said on Wednesday.
Creditor Support and Government Stance
Chief Executive Chris Weston told Reuters that a group of creditors seeking to acquire Thames Water was willing to provide additional funding to help the company avoid a cash crunch, but wanted clarity on the new government's position before committing further support.
"Creditors want to see what the new government thinks before doing anything further," CEO Chris Weston told Reuters on Wednesday.
Potential for Public Ownership
Burnham, who will become Britain's new Prime Minister within days, has previously said he believes public ownership is the best option for Thames Water, raising the likelihood of nationalisation of the country's biggest water company.
Creditor Group's Rescue Plan
A senior creditor group that includes Invesco, Elliott Management and Silver Point Capital has spent months trying to secure government support for a rescue plan aimed at keeping the company in private ownership.
Without a creditor-backed rescue, Thames Water could enter the government's Special Administration Regime, a form of temporary public ownership.
BALLOONING DEBT
Thames Water's Debt Burden and Sector Challenges
Thames Water, which serves 16 million customers, has become a symbol of failure in Britain's privatised water sector, blamed for polluting rivers with sewage due to ageing infrastructure, as it buckles under a £20 billion debt pile.
Implications for Government and Investors
A move to public ownership could prove costly for the government, potentially adding Thames Water's debt to Britain's already strained public finances and risking losses for investors. Such an outcome could also hinder Burnham's efforts to attract investment and stimulate economic growth.
Viability of a Market-Led Solution
Weston said the creditor rescue deal was still a viable option despite the discussions going on for a year, far longer than anyone had expected.
"It absolutely can still result in a market-led solution," he said.
"I think as long as everyone has confidence that the process is moving forward, then that liquidity will be forthcoming."
Company Performance and Outlook
Publishing results on Wednesday, Thames Water said its performance was improving. Sewage pollutions fell 18% in the 12 months to the end of March, and its underlying profit after tax came in at £204 million, up from £13 million last year.
(Reporting by Sarah Young; Editing by Muvija M and Louise Heavens)
