That leaves us with the barbarians coming to save the poorly enlightened.
Thames Water
.
KKR
, the prominent New York-based company frequently depicted as a cutthroat corporate raider, closely examined Britain’s largest water provider —
even though they didn’t like it, they decided on it
.
Why did KKR, known for their aggressive tactics exemplified by the hostile takeover of snack company RJR Nabisco in the late 1980s described as “Barbarians at the Gate,” decide to withdraw from the situation?
Thames Water
It is not entirely clear what constitutes a fiasco.
The notoriously secretive company isn’t commenting. However, sources close to the situation indicate that leaders at KKR concluded persistent political and regulatory opposition toward the water sector rendered it “uninvestable,” echoing a common sentiment expressed previously regarding Thames Water.
However, if KKR, a seasoned player with experience in numerous acquisitions globally, fails to justify investing in a highly leveraged monopoly utility, then who stands a chance?
The Thames are maintaining a positive outlook despite facing yet another unforeseen obstacle today. They assert that KKR discovered nothing “under the hood” within Thames that alarmed them, and they confirm that plans for an alternative refinancing strategy with key lenders will proceed as intended.
This is a burden the government truly could do without.
Despite each unsuccessful attempt to stabilize its precarious financial situation, Thames Water edges nearer to a government-led special administration—effectively a form of nationalization.
This is a burden the government truly could do without. Having
finally sold off its remaining shares in NatWest Bank
Just 16 years after receiving an emergency rescue during the peak of the financial crisis, they are the last entity that wishes to shoulder the burden of another “too big to fail” corporate liability.
Certainly, Thames Water’s debt of £19 billion, although substantial, does not pose a systemic risk to the British economy in the manner that the nationalized banks did during 2008 and 2009.
However, much like how RBS (known back then as NatWest) couldn’t be permitted to deplete its funds—then-Chancellor Alistair Darling worried about potential riots across the country within hours if ATMs ceased dispensing cash—Thames Water’s supply also cannot be allowed to dwindle to nothing.
The individuals accountable for Thames Water since its privatization in 1989—including proprietors, policymakers, overseers, and leaders—must share responsibility.
We still have a considerable distance to go before reaching that point, but Thames plays an indispensable role as a strategic national resource. It ensures over 16 million additional consumers, such as the King and the Prime Minister, along with many others throughout the city and large parts of the southeast, remain well-supplied with water—a crucial element for living.
It is astonishing that the supplier of such an essential service could find themselves ensnared in a seemingly endless battle for survival—one so daunting that even the formidable firm KKR opted to label it as “too difficult” and set it aside. This situation reflects poorly on nearly all parties concerned.
The individuals accountable for Thames Water since its privatization in 1989—including proprietors, policymakers, overseers, and superiors—must share responsibility for the deplorable state of affairs the organization currently faces.
Numerous individuals have grown wealthy throughout this process, resulting in a firm devoid of financial resources, which now struggles to secure the investments required for modernizing its network. As officials from Thames Water incessantly point out, this network continues to depend on outdated Victorian-era infrastructure.
However, it is the disadvantaged Thames customers and users who bear the brunt of this situation.
Still, the blame game persists as owners and managers accuse regulators and politicians of being responsible, while these same officials, driven by intense public backlash, maintain that selfish business leaders and shareholders should be held accountable for most of the issues.
However, it is the impoverished residents and users of the Thames who endure constant soaking.
Higher costs – they increased by 31% in April.
— by a firm that was penalized over £100 million just last week due to multiplefailures at its sewage treatment facilities.
In the meantime, a team of professional advisors—legal experts, financiers, and public relations specialists—are still earning millions of pounds annually from what Mr. Justice Leech appropriately termed “eye-wateringly high” fees in the High Court earlier this year, sifting through the remnants of Thames Water.
It’s quite a chaotic situation, and maybe KKR made the wise choice by pulling out. Wouldn’t it be great if the rest of us could do the same?
Jonathan Prynn serves as the Business Editor for the Standard.
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