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Thames Water’s parent company has sent a formal notice to bondholders informing them that it has defaulted on its debt, firing the starting gun on a potentially messy restructuring at the owner of Britain’s largest water utility.
On Friday, one of the holding companies that owns Thames Water announced that interest payments due earlier this week on a £400mn bond “have not been paid” and it issued a “formal notice of default”.
The bonds were issued by Kemble Water Finance, which sits above the nearly £15bn of debt at the Thames Water utility companies. Those companies should be unaffected by the move. Kemble last week told bondholders that it intended to stop paying interest on bonds.
The default threatens to wipe out the stakes of Thames Water’s nine shareholders, which include the Chinese and Abu Dhabi sovereign wealth funds as well as Canadian and UK pension funds. The shareholders last week said that actions by water regulator Ofwat had made the company “uninvestable”.
This is a developing story