Thames Water 'facing difficult situation' as £4bn rescue deal collapses, Steve Reed tells LBC
Environment Secretary Steve Reed has told LBC Thames Water remains “stable” and there is “no disruption to water supply”, after US private equity giant KKR pulled out of plans to invest in the troubled utility.
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The heavily indebted supplier - which chose KKR as its preferred bidder at the end of March - said the investment firm indicated it would not be in a position to proceed with a bid and that its preferred partner status had lapsed.
Speaking to LBC's Nick Ferrari at Breakfast during a regular Call the Cabinet slot, Environment Secretary Steve Reed said "Thames itself remains stable" and the government is "keeping a very close eye on the situation." He added there would be "no disruption to water supply."
When asked by Nick if there was a chance of the government stepping in and taking "emergency control" of Thames Water, Mr Reed said at the moment there was no chance of this and reiterated that the company and water supply were stable.
But, he also added the company was "clearly facing a difficult situation"
Thames Water said it intends to take forward discussions with "certain senior creditors" on an alternative plan to recapitalise the business.
Read more: Thames Water fined record £123m over sewage breaches and dividend payments
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It will also hold talks with regulator Ofwat on the senior creditors' plan, alongside other stakeholders.
Sir Adrian Montague, chairman of Thames Water, said: "Whilst today's news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal.
"The company will therefore progress discussions on the senior creditors' plan with Ofwat and other stakeholders.
"The board would like to thank the senior creditors for their continuing support."
But the withdrawal of KKR raises the spectre of a temporary government nationalisation once more, should it fail to secure a rescue deal.
Thames Water is about £19 billion in debt and MPs were told last month that at one point this year it had about five weeks' worth of cash left before going bust.
That was before it secured an extra £3 billion loan deal, which effectively stopped it from being renationalised and falling under Government control.
However it still needs substantial ongoing financial support to put its finances on a long-term stable footing.
The group was dealt a blow last week when it was fined a record £122.7 million by Ofwat after it was found to have broken rules over sewage treatment and paying out dividends.
Ofwat insisted that the money must be paid by Thames and its investors, not by customers.