A favorite buyer for the largest water company in the United Kingdom “would multiply” the problems of the public service firm with problems, it was warned in Westminster.
The concerns about the selection of Thames Water of Us Private Equity Giant Kohlberg Kravis Roberts (KKR) in an attempt to ensure a vital investment and stabilize their finances was raised by the Lord and the accountant Lord Sikka.
The very intense supplier, which has around 16 million customers, announced at the end of March that KKR would go to a second phase of the process to ensure capital investment.
The company expects to finish the terms of a possible agreement with KKR in the second quarter, with the aim of completing in the second half of the year.
However, Thames Water said there was still no “certainty” on an agreement that states that “certain higher creditors continue to progress in parallel alternative transactions structures to try to recapitize the business.”
The decision of the group to proceed with KKR occurred after he said that he had received six business approaches to pump in investment and effective in exchange for a business participation.
But talking in Parliament Lord Sikka said: “Thames, water was put on the way to ruin by private capital.
“Now his shareholders have appointed KKR, another private capital group, such as his favorite bidder.
“The KKR business model is a benefit, high leverage, low investment, removal of assets and high cash extraction.
“That will inevitably multiply the problems of Thames.”
Responding, the Minister of Environment, Baroness Hayman de Ulloch said: “With respect to the company that KKR chooses as its preferred bidder in the process of increasing current capital, clearly Thames Water is a commercial entity involved in an increase in public capital, and therefore would be completely inappropriate that the government comments on that.
“However, I notice that the company had a series of potential bidders to choose from, which indicates that it is a possibility directed by the market for the company's financial resistance.”
Previously, the minister told Peers that the industry regulator, OFWAT, continued related to the company “to guarantee the delivery of financial and operational change that both customers and the environment deserve.”
She added: “Any investor is expected to demonstrate that Thames Water will fulfill their legal and regulatory obligations.”
Thames Water is at least 16 billion of debt and stayed on the verge of a possible rescue backed by taxpayers, since it was in danger of running out of cash.
He obtained the approval of the Court in February to eliminate up to £ 3 billion more on loans, in an agreement designed to keep it in 2026.
Thames Water has given few details about KKR's proposal, except to say that he included a “material” reduction of his debt and that conversations were still ongoing “other aspects of the proposal.”
It is understood that KKR, which is also a minority shareholder in Northumbrian Water, presented a capital offer of £ 4 billion last month in exchange for a majority participation.
According to its offer, it is believed that KKR does not plan to break the water from the thames or sell assets to raise funds for its offer.
Thames Water has been contacted to comment.
