MPs urge ministers tae break aff Thames Water talks wi US hedge funds

Andy Burnham is under mair pressure tae tak control o the failin Thames Water frae a cross-party group o MPs who are callin for ministers tae break aff talks wi the US hedge funds who are effectively rinnin the company.

Addin their voices tae demands that the Prime Minister taks public control o the firm, which has debts o £20bn and is bein controlled by a group o 100 hedge funds and distressed-debt investors, the MPs said in a report that ministers shud consider emergency legislation tae tak control o its financial affairs tae stabilise the company.

Alistair Carmichael, the chair o the Environment, Food and Rural Affairs Committee (Efra), said it was unco that the special administration regime (SAR) for insolvent or failin watter companies cudna be triggered for Thames Water on performance grounds alane.

Angela Eagle, the Environment Secretary, has suggestit that an SAR – effectively temporary public control – canna be triggered under the current law because o the gate the US hedge funds that bocht Thames Water’s debt hae keepit it rinnin while seekin a deal tae renegotiate its liabilities.

The report said Ofwat and the govrenment shud withdraw frae negotiatin wi the consortium o distressed-debt specialists who lacked the proper expertise tae turn around a vital public service.

Carmichael said the creditors were operatin in an opaque gate, seekin relief frae environmental penalties and draggin oot negotiations while reapin millions o punds in debt interest.

Thames Water’s 16 million customers hae lairgely lost faith in it, he said. They are sick o seein their watterways polluted, their bills goin up, and drinkin watter gush through broken pavements while supplies run low. We believe Thames Water can be turned around, but no by giein the keys back tae the folk who hae been joy-ridin in the faimily caur.

The govrenment shud reject offers frae the company’s creditors in return for relief frae fines for pollution and puir service. We dae no believe this opaque consortium o 100 hedge funds and ithers has the interests o the public, the company or the environment at heart.

The report said ministers shud explore all potential alternative options, includin an SAR or usin fresh legislation tae draw a line under the debacle and restore stability tae the sector by puttin Thames Water on a soond footin for new buyers.

Carmichael said puttin the company into special administration once its money ran oot cud be the only gate tae reset its fortunes. Liabilities that the govrenment will face in the short term may be offset by a future sale o Thames Water once a new buyer can be foond, he said.

The intervention comes after 64 MPs debated a 200,000-strang petition, set up by the campaigner Ash Smith o Windrush Against Sewage Pollution, tae haud a referendum on puttin the privatised watter industry back into public ownership.

MPs on the Efra committee said they were concerned that no enough regulatory due diligence had been carried oot on the US-led consortium that bocht Thames Water’s debt.

Elliott Investment Management is one o the leadin creditors in the group that includes Silver Point Capital, BlackRock and M&G. Elliott’s foounder and co-chief executive is Paul Singer, a Trump donor whom Bloomberg has described as the maist feared investor in the warld.

The consortium o hedge funds – kent as London & Valley Water – is attemptin tae tak ower Thames in a multibillion-pund restructurin. It is seekin relief frae environmental fines which cud be worth up tae £1bn, requestin leniency on environmental measures includin pollution, leakage and ither performance targets imposed a year ago.

MPs said: Their demands demonstrate that they will no prioritise the swift turnaround in performance that Thames Water sae desperately needs.

Whilst keepin the company in limbo by drawin oot negotiations, these creditors are simultaneously reapin millions in debt interest and fees. We hae grave concerns. L&VW is an opaque consortium which is failin tae live up tae the transparency the public expects o the watter sector.

The committee said it was difficult tae see why SAR had no already been instigatit for Thames Water. Thames Water is at the end o the road. The company’s performance and the behaviour o its creditors are unacceptable. Their investment strategies are based on extractin value through debt rather than ensurin lang-term success.

A spokesperson for the London & Valley Water consortium said: Our enhanced proposal will address all feedback frae Ofwat and ministers and is the fastest route tae fix Thames Water’s complex problems.

The plan will write aff billions o punds o debt tae achieve an investment grade ratin and provide £10bn o new capital frae experienced investors tae improve and upgrade Thames Water’s infrastructure and clean up local rivers.

All fines Thames Water faces will be paid, all profits will be reinvested, and nae dividends will be takken until the company is turned around and returned tae the public markets. There will be nae cost tae the govrenment or taxpayers, and customers will be protected frae the costs o Thames Water’s restructurin.

A new board wi specialist expertise will oversee Thames Water’s transformation and wark tirelessly tae drive the turnaround and rebuild trust. We are committit tae ensurin Thames Water provides the service that customers and local communities deserve. This group o investors has never been in control o the company and has never received a dividend frae Thames Water. They hae steppit in tae fund a significant revenue shortfall tae ensure Thames Water’s record capital investment programme can continue withoot disruption.

A Defra spokesperson said: Thames has been failin the public for a lang time, and this govrenment has been clear that naething is aff the table when it comes tae a solution that delivers for customers and the environment.

A Thames Water spokesperson said: Turnin Thames Water around will tak a decade and require significant and sustained investment in oor infrastructure, but we are already makin progress and this is a different business frae the one it was twa years ago.

Tae sustain that turnaround, Thames Water needs tae be recapitalised and put on a firm financial footin, includin returnin tae an investment-grade credit ratin, sae we can continue investin for oor customers and the environment ower the lang term. Onythin that delays the recapitalisation risks slowin the turnaround, disruptin investment and increasin the cost o deliverin the improvements oor customers and the environment need.