KKR pulls out of planned Thames Water investment

(Sharecast News) - The funding crisis surrounding troubled UK water utility Thames Water deepened on Tuesday after US private equity firm KKR pulled plans to take a stake in the company, putting its future as a private entity in doubt.

Thames, labouring under a debt pile of £19bn, picked KKR as a preferred partner in March, as it looked to avoid renationalisation amid a wave of criticism for polluting rivers and streams with sewage and paying massive dividends to shareholders while customers face bill increases of 40%.

KKR said it was "not in a position to proceed", according to a statement from Thames Water, which added that it would now continue talks with industry regulator Ofwat over plans alternative submitted by certain "senior" creditors.

"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," said chairman Adrian Montague.

Reporting by Frank Prenesti for Sharecast.com