Parent company of Thames Water defaults on debt

Wednesday 10th April 2024 07:00 EDT

The parent company of struggling Thames Water has informed its creditors of a debt default, raising concerns about potential restructuring or collapse.

Kemble Water failed to make an interest payment and has asked creditors to refrain from action while exploring all options with stakeholders. Britain's largest water company, facing scrutiny for its sewage disposal practices, announced last week that its shareholders had declined to provide the promised £500 million to stabilise its finances, raising doubts about its viability.

Kemble, which relies entirely on dividends from Thames Water, intended to allocate a portion of the £500 million to repay loans owed by Kemble. However, the parent company stated last week that it would be unable to repay a £190 million loan due by the end of April.

The value of the £400 million Kemble bond, set to mature in 2026, has significantly declined in the past year, suggesting that debt holders anticipate a potential default by the company. Alvarez & Marsal consultants are collaborating with Kemble to evaluate its alternatives and initiate discussions with lenders and bondholders regarding its future debt arrangement.

Kemble serves as the top-level parent company of Thames Water, which caters to 16 million customers. Despite Thames Water's substantial £15 billion debt burden, company executives assert that both Thames and its customers are shielded from any fallout if Kemble were to collapse.

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