Thames Water's mucky debt deal offers little hope that it will ever clean up its act, says ALEX BRUMMER
With all eyes focused on the failures of South East Water in January, the far bigger Thames Water, with 16m customers, was dumping raw sewage into the River Mole in pastoral Surrey.
Nearly 800 cumulative hours of discharges were made between January 20-24 amid heavy rain.
The despoliation comes amid reports, first aired on Sky, that Britain’s largest water firm is closing in on a £16billion rescue deal with its creditors, which would prevent it from falling into public ownership.
Under the terms of the outline package, Thames creditors would take a 30 per cent cut to the debt pile of £22.8billion in exchange for 10 per cent of the equity.
They also have pledged to inject more than £3.15billion of new cash.
Most of the detail surrounding the deal is obscure, including the ownership and management of the self-styled London & Valley Water consortium, which plans to control the utility.
Bailed out: Thames Water dumped raw sewage into the River Mole for 800 cumulative hours between January 20 and January 24 this year amid heavy rain
The negotiations with an array of sharp-shooting creditors, including debt specialists Elliott, Silver Point and Pimco, have been conducted behind closed doors.
The secrecy is unfortunate given the wider public interest for domestic customers and business users, as well as victims of the utility’s continued pollution of rivers in the Thames Valley.
Under the proposed deal, the enigmatic London & Valley Water is understood to have committed to £20.5billion of infrastructure and service spending over five years.
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It is pledging no dividends until the business has been turned around. There is an agreement not to sell or relist until 2030.
Much of the investment, if it takes place, will come from agreed price increases, with a hike of 5 per cent starting in April this year.
The lack of commitment by the creditors beyond 2030 means there is very little time to turn around a notoriously leaky tanker with a poor environmental record.
There is no disclosure so far as to whether the new owners have been successful in winning a break from paying future penalties for failing to meet performance targets and polluting the waterways.
An outcome which gave the hard-nosed creditors a break on the disciplines imposed on the other suppliers would be a national disgrace.
The road to rescue is still rocky. Along the way the Government has managed to lose a longer-term deal with KKR’s infrastructure team and has given short shrift to an offer from Li Ka-shing’s CK Hutchison Holdings, owner of Northumbrian Water.
The failure to conduct an open auction process speaks volumes to a clueless Labour government.
Beazley battle
Zurich’s disclosure that it holds a 1.47 per cent stake in Beazley was seen as a sign that the Swiss behemoth is increasing the heat in its battle to seize control of the Lloyd’s underwriter.
The reality, it seems, is more mundane. The shareholding in Beazley stock consists largely of equity held by funds in Zurich’s asset arm.
At present there is no intention to build a larger strategic stake as Zurich pursues Beazley.
Currently there is a stand-off with the Beazley board still unwilling to fully engage with Zurich despite a formal offer worth £7.7billion on the table, following four previous informal approaches.
Beazley’s case has not been assisted by the revelation in The Mail on Sunday that several of its directors purchased significant amounts of Beazley shares in August 2025, after informal approaches had been made but before the Zurich interest was public.
The case against Zurich deal remains the same. The offer price is underwhelming. More importantly the entrepreneurial spirit which has taken Beazley into new areas of risk, such as cyber security, will not be enhanced by Swiss control.
Chocolate fudge
Which is the world’s largest chocolate company? The more obvious pub quiz answers would be Mondelez, owner of Cadbury, Hershey, Nestle, Mars or Ferrero.
The real choc champion is Switzerland’s Barry Callebaut, which supplies chocolate for Unilever’s Magnum and Nestle’s KitKat.
A punch-up on the Barry Callebaut board over a proposal to spin off the group’s cocoa unit led to the departure of boss Peter Feld and his replacement by Unilever discard Hein Schumacher.
What goes around comes around.
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