(Reuters) -Thames Water owner Kemble said on Friday it has defaulted on its debt after missing an interest payment that was due on Tuesday, a move that could kick off a restructuring of the UK’s biggest water group.
Thames Water has been engulfed in crisis and could face nationalisation after its shareholders last week said they would not inject more cash into the company.
The group has said its shareholders had refused to pay 500 million pounds ($631.40 million) promised to stabilise its finances, heightening concerns over its survival.
Kemble Water Finance said it was requesting its lenders and noteholders to take no creditor action to “provide a stable platform while all options are explored” with its stakeholders.
Thames Water and Kemble Water Finance have appointed turnaround consultant Alvarez & Marsal to handle negotiations with lenders, they said in a statement.
Kemble has a 190-million pound ($240.79 million) loan that falls due on April 30. The company’s shareholders said last week Kemble would be unable to repay the debt and would ask its lenders for an extension.
Total net debt of Kemble and Thames Water is close to 16 billion pounds ($20.15 billion). Of this total, 14.8 billion pounds are class A bonds and loans, ranking ahead of 1.7 billion pounds of class B debt, based on Thames Water Utilities investor report published in March last year.
Thames Water (Kemble) Finance has also sent a formal notice of default to holders of 400 million pounds bonds due 2026, its statement on Friday said.
The troubled British utility had its debt rating cut on Thursday by two credit ratings agencies, Fitch and S&P, sending the value of the bonds down sharply.
($1 = 0.7919 pounds)
($1 = 0.7940 pounds)
(Reporting by Yadarisa Shabong in Bengaluru and Andres Gonzalez in London. Editing by Anousha Sakoui and Jane Merriman.)
