The private equity firm that had been the frontrunner to lead a rescue of the UK’s largest water provider – Thames Water – has pulled out.
Thames Water Utilities, which is staring down the prospect of a special administration process without fresh investment, said an alternative plan was now under discussion after KKR’s exit from the process.
It is understood that the company hopes a new transaction could be agreed by July.
KKR was handed preferred bidder status back in March as Thames, which serves 15 million customers but has a £22.8bn debt pile, moved to secure fresh equity.
Thames said that KKR had indicated it was not in a position to proceed. No reasons are understood to have been given.
But its withdrawal was announced a week after Thames was handed a record fine by the industry regulator for failures related to its wastewater operations and dividend payouts.
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Thames Water hit with huge fine
The move was also divulged shortly after an interim report for the government raised the prospect of a super regulator being created to bolster and streamline oversight of the water industry.
Thames said it was now progressing talks with senior creditors for an alternative to stabilise its finances, and was also planning discussions with the regulator Ofwat on that plan.
The watchdog is understood to be studying a 400-page document which includes proposals for new equity and debt facilities.
It is hoped that a transaction could be completed by next month.
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The company’s chairman, Sir Adrian Montague, said: “Whilst today’s news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal.
“The company will therefore progress discussions on the senior creditors’ plan with Ofwat and other stakeholders.
“The board would like to thank the senior creditors for their continuing support.”
Cash-strapped Thames secured a £3bn lifeline to tide it over back in March as the company moved to secure fresh investment to guarantee its long-term survival.
It had kept open the prospect of an alternative solution, given there was no certainty over a KKR deal being agreed.
A failure to find new investment again raises the prospect of Thames falling into a special administration process.
That would effectively see the company come under temporary government ownership to maintain vital services until a new owner, or ownership solution, is found.
A spokesperson for the industry lobby group Water UK responded: “Everyone agrees that the water industry is not working. We hope this report will be a starting point for the fundamental reforms the sector needs. We need a less complicated system which allows investment to get quickly to where it needs to go.
“In the meantime, companies are focused on investing a record £104bn over the next 5-years to secure our water supplies, end sewage entering our rivers and seas and support economic growth.”
Chair of the environment committee of MPs, Alistair Carmichael, said: “In our evidence session with Thames Water bosses in May we raised serious concerns that Thames had only pursued one bidder at an early stage for its takeover bid, against the wishes of Ofwat, and highlighted the risks this could pose if KKR chose not to proceed. Unfortunately, our concerns have been realised, putting Thames in a perilous position.
“The Government has shied away from acknowledging the potential impact of this scenario on the public finances and must ensure that any takeover is in the public interest and does not line the pockets of financial institutions further to the detriment of customers and operational performance.”
In a small hut next to Newlyn Harbour at the bottom of Cornwall, the next generation of fishermen are quite literally learning the ropes.
Around a dozen students are on the eighth day of a two-week intensive course to become commercial fishers.
From knot and ropework to chart plotting, navigation to sea survival, by the end of the course they’ll be qualified to take a berth on a vessel.
While many are following in the footsteps of their fathers, others are here to try an entirely different career.
Image: Elliot Fairbairn
Elliot Fairbairn, 28, is originally from London and has been working as a groundworker.
“I’m not from a fishing family – I just like a challenge,” he says.
He’s put his current job on hold to see how fishing works out.
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“It makes you feel good doing a hard job.I think that’s what’s getting lost these days, people want an easy job, easy money and they don’t understand what it takes to be successful. Sometimes you’ve got to put that in the work.”
Elliot already has a job lined up for next week on a ring-netter boat.
“I’m ecstatic – I’m very pumped!” he tells me.
Image: Students take part in a two-week intensive course to become commercial fishers
Also on the course is 17-year-old Oscar Ashby. He’s doing his A-Levels at Truro College and training to be a healthcare worker at the main hospital in Cornwall.
“I’m part of the staff bank so can work whatever hours I want – which would fit quite well if I wanted to do a week’s fishing,” he says.
It’s his love of being outside that has drawn him to get qualified.
“It’s hands-on, it’s not a bad way to make money. It’s one of the last jobs that is like being a hunter-gatherer really – everything else is really industrialised, ” Oscar says.
The course was over-subscribed.
The charity that runs it – Seafood Cornwall Training – could only offer places to half those who applied.
‘A foot in the door’
“The range of knowledge they’re gathering is everything from how to tie a few knots all the way on how to register with HMRC to pay and manage their tax because they’d be self-employed fishermen,” manager Clare Leverton tells me.
“What we’re trying to do with this course is give them a foot in the door.
“By meeting our tutors, skippers on the quay, vessel managers, they start to understand who they’re going to have to talk to to get jobs.”
Getting fresh blood into the industry is vital.
Over the last 30 years, the number of fishermen in the UK has nearly halved – from around 20,000 to 10,000.
The average age of a fisherman in the UK is 55.
Aging workforce
Image: Mike Cohen, chief executive of the National Federation of Fishermen’s Organisations
“I think we’re seeing the effects of having an aging workforce,” says Mike Cohen, chief executive of the National Federation of Fishermen’s Organisations (NFFO).
“Fishing is a traditional occupation in most places around the country. A lot of family businesses, and as people are getting older, they’re starting to retire out of the industry.”
The decline comes at a time of frustration and anger in the industry too.
Many feel the prime minister’s post-Brexit deal with the EU back in May sold fishing out by guaranteeing another 12 years of access to EU boats to fish in UK waters, rather than allowing it to be negotiated annually.
“A large part of the effort the EU exerts in UK waters is within our territorial waters, so within 12 miles of the shore. And that’s the area that’s most pressured,” adds Mr Cohen.
“For new people getting into the industry it’s the area that they can reach in the sort of small boats that new starters tend to work in. They’re increasingly pressured in that space and by keeping all of those European boats having access to it for free, for nothing, that puts them under even more pressure.”
The government says it will always back “our great British fishing industry” and insists the EU deal protects Britain’s fishing access.
‘A brilliant career’
To further promote getting young people into commercial fishing, the Cornwall Fish Producers Organisation has helped set up the Young Fishermen Network.
Skipper Tom Lambourne, 29, helped set up the group.
“There’s not enough young people coming into it and getting involved in it,” he says.
“It’s actually a brilliant career. It’s a hard career – you do have to sacrifice a lot to get a lot out of fishing – your time is one of them. But the pros of that certainly outweigh it and it’s a really good job.”
Image: Tom Lambourne, from the Young Fishermen Network
Tom says the network supports new fishers by holding social events and helping them find jobs: “There’s never been a collective for young fishermen.
“For a youngster getting into the fishing industry to be sort of part of that – knowing there’s other youngsters coming in in the same position – they can chat to one another, it’s pretty cool really.”
A body has been pulled from a river in the search for a missing 12-year-old boy.
The body was found in the River Swale in Richmond late Saturday, North Yorkshire Police said.
Police launched a search for the boy after receiving reports at 5pm that a boy had entered the river and not been seen since.
Specialist search teams as well as fire and rescue officers were deployed to help with the search, with crews “recovering a child’s body from the water” at 10.45pm.
“The body is yet to be identified, but the boy’s family have been informed and are receiving support from specially-trained officers,” police said in a statement.
Well-wishers are being urged to send 100th birthday cards to a Second World War veteran who served in the Arctic Convoys to make his surprise celebration extra special.
Dougie Shelley, who has no known surviving family, joined the Royal Navy at 17, served as a seaman gunner and said earlier this year: “There’s not many of us left.”
Image: Mr Shelley during his Royal Navy days. Pic: PA
The sailor, of Southend in Essex, was on a ship in Hong Kong when news came through of Germany’s surrender, and said in a previous interview that it “couldn’t have been better”.
He said: “The war killed so many people, it’s unbelievable. All around, the Americans, Russians, all the Allies, the same with the Germans.
“But you were doing a job, the same as they had to. It’s either kill or be killed.
“When we heard about victory in Europe, everybody got together and we all had a good old drink up and jolly up, and couldn’t welcome it much better.”
Image: Pic: PA
Mr Shelley will turn 100 on 23 September.
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John Hawes, chairman of the Southend branch of the Royal Naval Association, is appealing for people to send birthday cards for Mr Shelley, which will be shown to him at a party on the day.
‘Loves a tot of rum’
Mr Hawes told Sky News Mr Shelley was the branch’s “last Arctic convoy veteran and also he was at D-Day”.
Mr Shelley “will love this”, Mr Hawes said, adding that the veteran is “very talkative and loves to talk about his naval career” and “likes a tot of rum on a daily basis, so we’re hoping that when he joins us, we can have a tot of rum with him”.
Image: John Hawes will be baking Dougie Shelley’s birthday cake
Mr Hawes is hoping to collate at least 100 birthday cards and may get some help from France.
He has contacted an English teacher at a school in Normandy to ask students there to send cards, as they do to British veterans at Christmas.
Dougie Shelley was a gunlayer, Mr Hawes said, and was responsible for aiming a ship’s guns, serving on the Royal Navy Destroyer HMS Milne.
‘Brought a tear to his eye’
He “would have gone through quite a bit” and, among other things, would have been responsible for “chipping ice off the guns” while “wearing his duffle coat and maybe three or four pairs of gloves”.
“He did tell me about ships being torpedoed, and it brought a tear to his eye when he saw what had actually happened.”
He was also on the Milne when it was deployed off the Normandy coast in support of the D-Day landings, and “might have been shelling some of the fortifications there”, Mr Hawes said.
“Dougie really had his work cut out there being a gunlayer.”
A tea party and cake
A tea party is being laid on for the big day, with Mr Hawes, who was a chef and baker on the aircraft carrier HMS Eagle, down to bake a Victoria sandwich birthday cake, and a lot of guests are expected.
“Dougie will have a lot of friends there, especially shipmates from our branch,” Mr Hawes said.
Earlier, Mr Hawes said he “really deserves something, he has been one of our founder members way back in 1980 I think it was when the actual club opened.
“He’s always been with us on Remembrance Sunday in his wheelchair, and somebody’s pushed him up to the cenotaph at Southend.
“I think he’s going to thoroughly enjoy it, he really will, he’ll be over the moon,” said Mr Hawes.
“Dougie always likes to let everybody know he’s there, and this will blow his socks off I think.”
Mr Shelley’s carer Paul Bennett said he was on the HMS Milne on D-Day “supporting the chaps going off to land in craft ashore in Normandy, and he was a gunner keeping the skies clear of enemy aircraft”.
The birthday cards can be sent to the Royal Naval Association club, 73-79 East Street, Southend-on-Sea, Essex, SS2 6LQ.