Class B bondholders were notified on Thursday that they would no longer be connected to the Class A noteholders, who were represented by the law firm Akin Gump and the investment bank Jefferies, according to information News was able to obtain.
According to one bondholder source, the separation was caused by a possible conflict of interest between the two groups of lenders.
The class B bondholders are said to owe hundreds of millions of pounds, a small fraction of the estimated £19 billion in borrowings by Thames Water.
In order to protect their interests as Thames Water, they are now expected to hire attorneys and financial advisors.
With a £3 billion equity offering reportedly having little chance of success while the company’s investment plans are still pending permission from industry regulator Ofwat, Thames is running out of time to arrange a private sector bailout.
By January at the latest, a final decision on those plans—which involve significant bill increases—must be released.
Ofwat hired LEK Consulting last week to keep an eye on Thames Water’s turnaround initiatives.
About £12 billion of Thames’s debt is owed to Class A creditors, who met with the regulator last week to explore a different restructuring plan that would maintain private sector ownership of the business.
