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Thames Water lenders prepare legal action if UK nationalisation proceeds

Creditors say full nationalisation could trigger repayment demands for the full outstanding debt, potentially leaving the government with a multi-billion-pound bill.

Reported · Written up by our desk · Europe

Thames Water lenders are preparing a legal challenge if a Burnham-led government moves to nationalise the UK water company, the BBC Business reports. Sources close to the creditors say they would pursue payment in full of the outstanding debts in a full nationalisation scenario, a move that could expose the government to a multi-billion-pound cost.

The BBC says lenders previously proposed a restructuring that would write off nearly half of Thames Water's debt and inject new cash in exchange for leniency from future pollution fines. That deal was rejected by the government as weak and bad for consumers and the environment, according to the outlet.

Thames Water warned on Thursday that it has enough cash to last until the end of this year, the report adds. Creditors said on Sunday they are still working with officials and regulators to reach an agreement to rescue the company.

The lenders' proposal includes writing off 9.4 billion pounds of Thames Water's near 20 billion pounds debt pile and providing 3.35 billion pounds in cash, the BBC reports. A UK government spokesperson for the Department for Environment, Food and Rural Affairs said the government is prepared for any eventuality, while a separate Labour official argued in June against scenarios where customers would pick up the bill for company failures.

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