Kemble Water, the parent company of the embattled Thames Water, has informed its creditors of a default on its debt, prompting speculation about the potential collapse or substantial restructuring of the company.
The missed interim payment, which was due on Tuesday, has raised concerns within financial circles regarding the future viability of Kemble Water. In response, the company has reached out to its lenders and bondholders, urging them to refrain from taking any immediate action, as discussions with stakeholders are underway to explore all available options.
Thames Water’s recent announcement that its shareholders have withheld a promised £500 million infusion to stabilize its financial position has exacerbated worries surrounding the company’s prospects.
The value of Kemble’s £400 million bond, set to mature in 2026, has seen a significant decline over the past year, indicating growing apprehensions among debt holders regarding the likelihood of default.
Kemble Water serves as the overarching parent entity of Thames Water, a utility company catering to 16 million customers. Despite the financial turbulence at Kemble, executives at Thames Water have sought to assure stakeholders that the operations and customers of Thames Water remain insulated from potential repercussions should Kemble face a collapse.
To mitigate immediate financial pressures, Kemble’s creditors may consider options such as extending a £190 million loan due by the end of the month, thereby buying additional time. Additionally, discussions surrounding a potential debt-for-equity swap could be pursued as part of a negotiated solution.
Recent revelations have shed light on the composition of Kemble’s creditor base, which includes prominent institutions such as ING, Allied Irish Banks (AIB), and state-owned entities like the Bank of China and Industrial and Commercial Bank of China (ICBC).
