U.S. private equity firm KKR drops bid to buy troubled British utility Thames Water
Thames Water said private equity company KKR decided not to make a bid and its status as preferred bidder had lapsed. The utility said it is talking to 'senior creditors' about an alternative money-raising plan.
'Whilst today's news is disappointing, we continue to believe that a sustainable recapitalization of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal,' Thames Water chairman Arian Montague said.
The cash-strapped company, which provides water and sewage services to 16 million people in and around London, has teetered on the edge of insolvency under about 19 billion pounds ($26 billion) in debt. The utility received court approval in March for 3 billion pounds in emergency funding to keep it from falling into government administration.
KKR's withdrawal makes it more likely the British government will have to nationalize the company, at least temporarily.
Environment Secretary Steve Reed said the government was 'monitoring the situation,' but 'Thames (Water) itself remains stable.'
Thames Water is the focus of nationwide anger over sewage spills that have fouled lakes, rivers and beaches at a time when water and sewage companies are hiking bills to modernize aging systems and cope with the demands of climate change and population growth.
Last week the company was fined almost 123 million pounds ($166 million) for releasing sewage into rivers and streams while paying dividends to its shareholders.
Consumers and politicians have criticized the company, arguing Thames Water created its own problems by paying overly generous dividends to investors and high salaries to executives while failing to invest in pipelines, pumps and reservoirs.
Company executives say the fault lies with regulators, which kept bills too low for too long, starving the company of vital cash to fund improvements.
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