Thames Water bidder says it is offering £1bn extra cash injection | Thames Water

A bidder for Thames Water has said he would inject £1bn more into the struggling utility than rival bids if he gained control.

John Reynolds, chief executive of independent water retailer Castle Water, said current plans being discussed with creditors to rebuild Thames Water’s finances did not go far enough and did not properly address the environmental crisis.

He told the Times that Castle Water would provide a cash injection of at least £1bn based on current proposals.

“No one wants a restructuring that is not permanent. Negotiations are going nowhere,” he said.

“You can’t compromise on the pollution problem. It needs to be solved, and that means changing the way the company spends its money.”

Thames Water, which provides water to around 16 million customers in London and the Thames Valley, has been on the verge of collapse for several years as it struggles under the weight of £17bn of net debt accumulated in the decades since privatisation.

Lenders led by a group of hedge funds including struggling US firms Elliott Investment Management and Silver Point Capital have effectively taken over Britain’s biggest water company.

The turnaround plans include writing off billions of pounds of debt and proposals that mean Thames Water may not fully comply with rules on pollution of Britain’s waterways for as long as 15 years. Reynolds told the Times there should be “zero tolerance” for serious pollution incidents.

“There needs to be upfront investment, you can’t get this done without that,” he said, adding that the plans would target the aging Mogden sewage works in west London.

He told the newspaper that the extra investment could be unleashed by a larger cut in creditors’ liabilities and an injection of extra equity investment.

The alternative to a creditor-led turnaround plan is a special administration regime in which the water company would temporarily come under government control to achieve debt write-off and find a buyer.

Reynolds, a former investment banker and turnaround expert, said talks between creditors and industry regulator Ofwat over restructuring Thames had stalled. But a spokesman for creditor group London & Valley Water denied talks were progressing and said they were still aiming to get approval for its plan by Christmas.

Castle Water is a relatively small company backed by the property empire of the billionaire Pears family and co-founded by Conservative party treasurer Graham Edwards. In 2016 it acquired Thames Water’s non-domestic water and sewage retail business.

Late last year, Castle Water reportedly It has offered to inject £4bn into Thames in exchange for a majority stake.

If Castle’s bid is successful, up to 2,000 jobs will be created, including engineers, scientists and operational staff, as part of a 25% increase in spending, the PA news agency reported.

A spokesman for London & Valley Water said: “It is not true that discussions have stalled. Thames Water needs £5bn of urgent funding from dedicated and experienced new investors to deliver better outcomes for its customers and employees. We are working hard to provide a solution as quickly as possible.”

“The London & Valley Water plan will invest £20.5bn over the next five years to repair foundations, improve the network and reduce pollution so that Thames Water can once again be a reliable, resilient and responsible company for its 16 million customers.”

A Thames Water spokesman said: “Discussions are ongoing between senior creditors of Thames Water Utilities Ltd, the London & Valley Water consortium, Ofwat and other regulators regarding a potential market-led solution to recapitalize the company.

“TWUL remains focused on delivering a recapitalization transaction that serves its customers and the environment as quickly as possible.”

Ofwat has been approached for comment.