British MPs call for Thames Water to be placed under state control — The Guardian
In the United Kingdom, a cross-party group of MPs has called on ministers to halt talks with US hedge funds over Thames Water and consider the possibility of temporary state control over the water company. The Guardian reports.
A report by the parliamentary Environment, Food and Rural Affairs Committee states that the government could resort to emergency legislation to take control of Thames Water's financial affairs and stabilise its operations. The company has £20 billion in debt. According to the publication, it is effectively controlled by a group of 100 hedge funds and distressed-debt investors.
Special administration
Committee chair Alistair Carmichael said it was unclear why the special administration regime had still not been initiated for Thames Water. Such a mechanism provides for temporary state control over an insolvent or troubled water company.
Environment Minister Angela Eagle had previously stated that, under current legislation, this regime could not be applied because the US funds that bought Thames Water's debt are supporting the company's operations while talks are underway to revise its obligations. The committee recommended that the government and regulator Ofwat halt negotiations with the consortium, which MPs believe lacks the appropriate experience to restore a vital public service.
More current news is available on the UA.News Telegram channel Telegram.
Creditors' position
The London & Valley Water consortium is seeking to take control of Thames Water as part of a multibillion-pound restructuring. The group's leading creditors include Elliott Investment Management, while Silver Point Capital, BlackRock and M&G are also part of it. The consortium is asking for environmental fines, which could reach £1 billion, to be eased, as well as for requirements on pollution, water leaks and other performance indicators to be relaxed.
MPs said these demands show that rapidly improving Thames Water's performance is not a priority. They also expressed concern that the creditors, in their view, are prolonging negotiations while receiving millions of pounds in interest and fees.
A London & Valley Water representative said the revised proposal provides for writing off billions of pounds in debt, raising £10 billion in new capital to modernise infrastructure and clean up rivers. The consortium also pledged to pay all fines, reinvest profits and pay no dividends until the company is restored.
