MPs are urging the government to take a stand against the US hedge funds currently running Thames Water, a company with a staggering £20 billion in debt. This call to action comes from a cross-party group of MPs who are concerned about the lack of transparency and the potential for further environmental degradation. The report highlights the need for emergency legislation to take control of Thames Water's financial affairs and stabilize the company, which has been under the control of a consortium of 100 hedge funds and distressed-debt investors.
The special administration regime (SAR) for insolvent or failing water companies, which could be triggered on performance grounds, is currently not being considered for Thames Water. This is despite the company's poor performance and the concerns raised by MPs. The environment secretary, Angela Eagle, suggests that the current law prevents the SAR from being triggered due to the way the US hedge funds have managed Thames Water's debt. The report emphasizes the need for Ofwat and the government to withdraw from negotiations with the consortium, which lacks the expertise to manage a vital public service.
The creditors are operating in an opaque manner, seeking relief from environmental penalties and dragging out negotiations while reaping millions in debt interest. This has led to a loss of faith among Thames Water's 16 million customers, who are tired of seeing their waterways polluted, bills rising, and drinking water issues. The MPs believe that Thames Water can be turned around, but not by returning control to the creditors who have been exploiting the system. The government is urged to reject offers from the creditors and explore alternative options, including an SAR or fresh legislation, to restore stability to the sector.
The intervention comes after a 200,000-strong petition was debated by 64 MPs, calling for a referendum on re-nationalizing the privatized water industry. The committee expresses concern over the lack of regulatory due diligence on the US-led consortium that bought Thames Water's debt, with Elliott Investment Management as a leading creditor. The consortium, known as London & Valley Water, is attempting a multibillion-pound restructuring and seeking relief from environmental fines, which raises further questions about their commitment to addressing the company's issues.
The committee's report highlights the urgency of the situation, stating that Thames Water is at the end of its rope and that the behavior of its creditors is unacceptable. The investment strategies of these creditors are criticized for focusing on debt extraction rather than long-term success. The report concludes by urging the government to take decisive action to protect the public interest and restore trust in the water sector.
