Thames Water’s £190 Million Debt Trades as Rescue Talks Drag On
(Bloomberg) -- A chunk of Thames Water’s debt changed hands this week as negotiations over a rescue plan for the ailing utility have yet to yield a breakthrough.
Around £190 million ($250 million) of Class A index-linked loans due in 2033 were sold via auction, according to people familiar with the matter, who spoke on condition of anonymity. Thames Water’s bonds edged up on the back of the sale, with the securities due in April 2029 gaining over 3 cents this week to around 69 cents on the euro, according to pricing compiled by Bloomberg.
A spokesperson for Thames Water declined to comment.
The sale underscores how some creditors are looking to reduce their exposure amid the protracted negotiations.
A group of senior debt-holders — including Silver Point Capital, Elliott, Apollo Global Management and Aberdeen Group Plc — has pitched a plan entailing £5 billion of fresh funds in the form of both new equity and debt. The proposal also includes “several billions of debt write-downs” to ensure financial stability and make the company’s debt pile sustainable again.
These funds are currently restricted from buying and selling Thames Water’s debt as they were given access to confidential information as part of the negotiations, some of the people said.
The Class A creditor group is now locked in talks with water regulator Ofwat over potential concessions for the company while it focuses on turning around its operations and finances.
Ofwat agreed to extend a deadline to refer the company to the Competition Markets Authority to appeal its final determination from earlier this month to October 22, to allow these conversations with creditors to continue. The final determination governs what water and sewage companies will be able to spend on crumbling infrastructure during the next five years.
Should a private rescue process fail, Thames Water could fall into a special administration regime, a temporary state-supervised process akin to insolvency for bankrupt businesses that provide critical services.
The beleaguered utility, which serves more than 16 million customers in London and the surrounding area, has been fighting for survival after previous shareholders wrote off their stakes, calling the firm “uninvestible.”
The firm came close to running out of money several times before it started drawing on an emergency loan from the Class A creditors in March.
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