A group of Thames Water creditors has threatened legal action if Britain's new prime minister, Andy Burnham, moves to nationalise the debt-laden utility, a source familiar with the plans said on Monday.
Burnham has repeatedly said that public ownership is the best solution for Thames Water, which has been fighting for survival for years after successive owners failed to invest adequately in its ageing infrastructure.
The neglect has left the company at the centre of public anger over sewage discharges into rivers and seas.
The utility's future is also being closely watched by international investors as an early indication of how the new government, due to take office on Monday, will approach financially distressed infrastructure assets.
Thames Water has said it will run out of money by November, making it one of Burnham's first major challenges in office.
In a warning against nationalisation, the creditor group said it would seek to recover the company's outstanding debts through the courts if the government takes control, potentially leaving Burnham's administration facing a multibillion-pound bill at a time of intense pressure on the public finances.
Mike McTighe, who is working with the creditor group to build a new board for Thames Water, said that the group's preference was to work with Burnham to find a solution, and this could include expanding public oversight of the company.
"We are keen to meet new ministers as soon as possible to discuss how we can work together in the best interests of customers, including by enhancing public control of the company's operations," he said in a statement.
Thames Water, Britain's largest water company with 16 million customers across London and southern England, has for years been held up as the clearest symbol of the failure of Britain's privatised water industry.
The creditor group, which includes Invesco, Elliott Management and Silver Point Capital, have spent months trying to convince the government to back its rescue deal, which involves writing off about half of Thames Water's £20 billion ($27 billion) debt and investing £3.35 billion of new equity.
In return the creditors want to be given leniency over any environmental fines - a politically difficult concession for any government to make.
The government has so far rejected that deal and the creditor group has been working on improving its offer in recent weeks.
Should the government take Thames Water into its Special Administration Regime, a form of temporary public ownership, taxpayers would need to pump in about £2 billion to keep the utility going for the next 18 months, Thames Water's management has said.
-Reuters
Burnham has repeatedly said that public ownership is the best solution for Thames Water, which has been fighting for survival for years after successive owners failed to invest adequately in its ageing infrastructure.
The neglect has left the company at the centre of public anger over sewage discharges into rivers and seas.
The utility's future is also being closely watched by international investors as an early indication of how the new government, due to take office on Monday, will approach financially distressed infrastructure assets.
Thames Water has said it will run out of money by November, making it one of Burnham's first major challenges in office.
In a warning against nationalisation, the creditor group said it would seek to recover the company's outstanding debts through the courts if the government takes control, potentially leaving Burnham's administration facing a multibillion-pound bill at a time of intense pressure on the public finances.
Mike McTighe, who is working with the creditor group to build a new board for Thames Water, said that the group's preference was to work with Burnham to find a solution, and this could include expanding public oversight of the company.
"We are keen to meet new ministers as soon as possible to discuss how we can work together in the best interests of customers, including by enhancing public control of the company's operations," he said in a statement.
Thames Water, Britain's largest water company with 16 million customers across London and southern England, has for years been held up as the clearest symbol of the failure of Britain's privatised water industry.
The creditor group, which includes Invesco, Elliott Management and Silver Point Capital, have spent months trying to convince the government to back its rescue deal, which involves writing off about half of Thames Water's £20 billion ($27 billion) debt and investing £3.35 billion of new equity.
In return the creditors want to be given leniency over any environmental fines - a politically difficult concession for any government to make.
The government has so far rejected that deal and the creditor group has been working on improving its offer in recent weeks.
Should the government take Thames Water into its Special Administration Regime, a form of temporary public ownership, taxpayers would need to pump in about £2 billion to keep the utility going for the next 18 months, Thames Water's management has said.
-Reuters
