Discover the Secret Strategy that Earned a 17% Instant Profit on a Thames Water Crisis Loan

Uncover Exclusive Insights from the Editor’s Picks

Discover a curated selection of captivating stories handpicked by Roula Khalaf, the esteemed Editor of the FT, in our weekly newsletter.

1. Pimco’s Profits Surge:

• The renowned bond fund, Pimco, has hit the jackpot with a 17 per cent profit on a substantial emergency loan extended to a struggling Thames Water, alongside other lenders.
• Various Pimco funds recorded a significant increase in the value of the new debt, showcasing the rapid gains reaped by major investment firms and hedge funds in supporting financially challenged entities.

1. High-Stakes Legal Battle:

• Despite facing fierce opposition, Thames Water, the UK’s largest water company, sought a substantial £3bn loan to stabilize its precarious financial position.
• However, the loan approval faces challenges from environmental activists, MPs like Charlie Maynard, and junior creditors, indicating a turbulent legal ordeal ahead.

1. Costly Lifeline:

• The consortium of lenders, including Pimco, Elliott Management, and Silver Point, is demanding a hefty interest rate of 9.75 per cent from Thames Water, potentially costing the utility over £800mn.
• The controversial deal has sparked debates on whether Thames Water could have secured better terms elsewhere, leading to conflicting proposals from rival creditors.

1. Battle for Control:

• Dissenting junior creditors have proposed an alternative financing package at a lower 8 per cent interest rate, challenging the dominance of the senior class A creditors.
• Calls for temporary nationalization under special administration seek to alleviate the burden of exorbitant interest payments on Thames Water and taxpayers.

In the midst of this financial saga, the decision-makers are grappling with a precarious balancing act between securing the future of Thames Water and safeguarding the interests of various stakeholders. The outcome of these debates will undoubtedly have far-reaching implications for the utility and the UK’s financial landscape at large. Stay tuned for further developments as the legal battle unfolds.