Thames Water Trade Is Looking Slippery for Hedge Funds
Thames Water’s creditors need to cede ground now for a shot at a bigger future payback.
Photographer: Chris Ratcliffe/BloombergCreditors to Thames Water sweetened their proposal to stabilize the beleaguered utility’s finances earlier this month, in an effort to keep it from sliding into administration. That’s not altruism. It makes sense for this unusual collection of credit investors and hedge funds to give a bit away now to potentially open the path to a bigger payback in future.
Thames needs to cut its £17 billion-plus ($23 billion) debt and raise cash to fund major fixes to its broken network. One solution is a special form of company administration whereby the utility would be sold to a new long-term owner; the UK Treasury would lend cash to Thames to fund its operations in the meantime, and the debt owners would take a hit.