Rohit Sarkar’s Post

The fate of Thames Water hinges on its complex corporate structure and default terms. The recent Kemble bond default underscores the distinction between secured assets and unsecured debt. Understanding "protected land" is key; it safeguards assets essential for water services. Lenders may question £14.7bn in unsecured lending, but they have charges over asset sale proceeds. Potential outcomes include Thames Water entering the Special Administration Regime and assets being sold. Ofwat faces pressure to balance infrastructure investment with consumer affordability. Political influence in the water sector often aims to avoid negative publicity. Public hostility hampers equity raising and debt servicing for Thames Water. In a twist, public pressure may lead to ownership of devalued equity. In light of these complexities, how can we ensure a sustainable balance between infrastructure investment and consumer affordability in the water sector? #waterservicesregulation #waterindustry

🚨 Thames Water Update🚨 Creditors of Thames Water, the UK's largest water provider, are preparing to inject over £1 billion into the company before year-end. This cash infusion, primarily from hedge funds and institutions holding around £10 billion in debt, aims to stabilize the utility ahead of a full restructuring, anticipated to be completed by next June. With net debt at £15 billion, Thames Water is in critical talks with creditors to secure necessary funds to navigate the coming months. The proposed financing, likely structured as high-interest loans or bonds, underscores the urgency of the situation as the company grapples with regulatory challenges and liquidity constraints. As the largest water provider in the UK, this is huge news but the ultimate story is that the realization of renationalization for the water company is where it's future currently is. #ThamesWater #Utilities #Finance #Restructuring #UKWaterIndustry

If you haven't been following the Thames Water scandal, you should be. A consortium of private equity investors (including Canadian pension funds, OMERS and BCI) have emaciated Thames Water, the biggest water and sewerage company in England, serving 15 million people. Thames Water was subject to decades of underinvestment, aggressive cost-cutting and huge dividend payments, especially at the hand of its former owner, the Macquarie Group, which sold the business in 2017. Thames is currently buckling under a £16 billion debt pile while struggling to deal with chronic leaks and sewage spills. Without new funding, it would likely be forced to apply for special administration — a form of temporary nationalization. Thames is also already in talks with regulators over how much they can increase bills to consumers over the next five years. Our pensions need to be responsible investors on the global stage. Thames Water is essential infrastructure that shouldn't be compromised to maximize financial returns for Canadian pensioners. #sustainableinvesting #maple8 #thameswater #privateequity Private Equity Stakeholder Project

The government said it is ready to step in at Thames Water if the debt-laden utility provider continues failing its customers. Robert Goodwill, MP and chairman of the Environment, Food and Rural Affairs Select Committee said the situation of Thames Water nearing insolvency was "of considerable concern". He said: "They are around about 80pc geared - that is like having an 80pc mortgage on your house. "We need to ensure this company does get itself on to an even keel financially so we can move forward, but the Government is ready to step in if necessary. "The primary role of the Government is first of all to protect customers, and secondly to protect the environment. "I think we all realise that we need more investment in cleaning up our water now that we are testing those outpours and know what is going on." Earlier today, it was revealed Thames Water was set to undergo a last-chance round of discussions over a... More at #Proactive #ProactiveInvestors http://ow.ly/AcgF105ocaU

The direct source of Thames Water’s woes is not the financial engineering and dividend-extraction over the years, appalling though that has been. It is old-fashioned operational failings (also known as running the business really poorly). Thames Water has failed to keep pace with the effects of population growth and the climate crisis, and is running a water and sewage network that the company itself describes as the oldest set of assets in the industry. The tally of water treatment works deemed “potentially non-compliant” is an astonishing 157, according to Ofwat’s document. An utter shambles, which should be take into special administration, the equity wiped out, and the bond holders only compensated to the tune of any enterprise value which exists (bearing in mind the costs of remediation to perform to its statutory duties).

Tales from the riverbank. Britain's privatised water companies' insatiable appetite for capital has given rise to an industry that has more than doubled its collective economic loss since 2019. With Thames Water's senior shareholders apparently refusing to provide further capital, the proverbial is not only in the rivers and near coastline but fast approaching numerous fans in the City. Given that the collective economic loss since 2018 is £10.96bn from revenues of £68.23bn, the industry's financial model and oversight requires a serious rethink (where have we read that before?). Thames Water's economic losses alone account for 29.3% of the total over the period. It is perhaps worth noting the following taken from the Rime of the Ancient Mariner; Water, water, every where, And all the boards did shrink; Water, water, every where, Nor any drop to drink. The very deep did rot: O Christ! That ever this should be! Yea, slimy things did crawl with legs Upon the slimy sea. #Water #Utilities #valuecreation

The Government has a duty to declare its intentions in respect of Thames Water and what #projecttimber means for the public purse. It is unacceptable and against the public interest to bail out a private company that has paid out over £7.2billion in dividends since it was privatised. The question that needs to be urgently answered is, is Thames Water currently trading insolvently? If it is, then it must enter administration and the government has the opportunity to create a new operating model for UK water. If, as is rumoured, the plan is that Thames Water will be acquired by the equally badly performing Southern Water, with some form of Government sweeteners attached, then this abhorrent #pollutingforprofit merry-go-round will continue. The intentions and strategy of #projecttimber must be declared, it is against the public interest for the Government not to be transparent in this respect. #sewagescandal #waterscandal

🚰🏗️ Meet Sir Adrian Montague, the new chairman ready to navigate Thames Water through its tumultuous tides 🌊 In a decisive move just days after a significant leadership shake-up, Thames Water has announced Sir Adrian Montague as its new chair. His track record as former chair of Anglian Water positions him to confront head-on the swirling questions about the water giant's future. 💼 As a utility under immense scrutiny for its towering £14 billion debt, this leadership transition is critical. The company, integral to 15 million households, finds its financial stability in the spotlight amidst sector-wide concerns over mounting debts totalling £60.6 billion. 🛡️ But fear not, customers! Rest assured, supplies will remain uninterrupted, with the UK Government and Ofwat ensuring a "secure and committed" backing. It's business as usual for taps across homes, with contingency plans in place should ripples turn to waves. 🌟 Sir Adrian's vast experience, including his roles at Cadent Gas and Manchester Airports Group, offers a beacon of hope. Thames Water, active in sector investments for environmental enhancement and service improvements, is now channeling efforts to navigate through this challenging era. 🔍 As we keep a keen eye on the evolution of Thames Water, the anticipation for the "super sewer" completion, managed by Tideway and distinct from Thames Water's operations, heralds a new chapter for London's infrastructure. #Leadership #WaterIndustry #FinancialSustainability 🌳💧📈

Thames Water's new money proposal and Asset & Equity (A&E) mean that the securitisation structure has now hit its proverbial iceberg. While the emergency tranche is backstopped, creditor compliance hinges on Ofwat's stance on price rises in its Final Determination due by December 19th. Our latest report dives deep into the financial and regulatory challenges facing Thames Water, including the proposed £3bn rescue plan, implications of Ofwat's decisions and the potential impact on water bills and sector stability. Download here: https://lnkd.in/eX85Pghb