Thames Water- Finished?
Discussion
CraigyMc said:
hidetheelephants said:
CraigyMc said:
hidetheelephants said:
borcy said:
Shareholders are full of s
t; they've extracted ~£20bn from the enterprise, fk them and the horse they rode in on. Let it go bust, the physical assets can be managed on a caretaking basis like LNER was until a politician with a spine can be found to make a decision about whether it stays private, goes welsh and not-for-profit or is nationalised.The guys you want to f
k right off, have already fked right off.theap of a company then should they. Don’t do the diligence and get burnt. That’s capitalism. 
CraigyMc said:
I've highlighted the part that is inaccurate. The current shareholders have not done this.
The guys you want to fk right off, have already fked right off.
They have, but the value of your investment can go down as well as up. Current shareholders should have done their due diligence. If they don't want to pay then they can go bust.The guys you want to f
k right off, have already fked right off.Of course I'm all for finding the guys who signed off ye olde debt/ dividends and granting them 200 hrs community service in the Ukrainian front lines though if possible. But really the regulators should have stepped in before it was even an option.
Dingu said:
CraigyMc said:
hidetheelephants said:
CraigyMc said:
hidetheelephants said:
borcy said:
Shareholders are full of st; they've extracted ~£20bn from the enterprise, fk them and the horse they rode in on. Let it go bust, the physical assets can be managed on a caretaking basis like LNER was until a politician with a spine can be found to make a decision about whether it stays private, goes welsh and not-for-profit or is nationalised.The guys you want to f
k right off, have already fked right off.theap of a company then should they. Don’t do the diligence and get burnt. That’s capitalism. hidetheelephants said:
Dingu said:
CraigyMc said:
hidetheelephants said:
CraigyMc said:
hidetheelephants said:
borcy said:
Shareholders are full of st; they've extracted ~£20bn from the enterprise, fk them and the horse they rode in on. Let it go bust, the physical assets can be managed on a caretaking basis like LNER was until a politician with a spine can be found to make a decision about whether it stays private, goes welsh and not-for-profit or is nationalised.The guys you want to f
k right off, have already fked right off.theap of a company then should they. Don’t do the diligence and get burnt. That’s capitalism. ked, because macquarie loaded it up with debt then sodded off with the funds 7 years ago.If I don't join you in this celebration, you won't think less of me, will you?
BoRED S2upid said:
CoolHands said:
CHINA!
so how much money was allowed out the company in dividends over the years? - Just looked it up, £7.2 billion
And here’s a nice graphic of the spiralling debt
Criminal. so how much money was allowed out the company in dividends over the years? - Just looked it up, £7.2 billion
And here’s a nice graphic of the spiralling debt
Let it go bust for f they can pay that much to share holders the Gov will be quids in when it’s nationalised
CraigyMc said:
So the teachers and lecturers pension funds that own more than half of this can get fked, because macquarie loaded it up with debt then sodded off with the funds 7 years ago.
If I don't join you in this celebration, you won't think less of me, will you?
They might want to have a word with their fund managers, or perhaps just fire them for being sked, because macquarie loaded it up with debt then sodded off with the funds 7 years ago.If I don't join you in this celebration, you won't think less of me, will you?
t at their job. I don't celebrate it but it's the right thing that shareholders get left with little or nothing if a company goes bust, no? If the company is unsustainable when appropriately regulated and fined for discharging untreated st then it deserves to.hidetheelephants said:
CraigyMc said:
So the teachers and lecturers pension funds that own more than half of this can get fked, because macquarie loaded it up with debt then sodded off with the funds 7 years ago.
If I don't join you in this celebration, you won't think less of me, will you?
They might want to have a word with their fund managers, or perhaps just fire them for being sked, because macquarie loaded it up with debt then sodded off with the funds 7 years ago.If I don't join you in this celebration, you won't think less of me, will you?
t at their job. I don't celebrate it but it's the right thing that shareholders get left with little or nothing if a company goes bust, no? If the company is unsustainable when appropriately regulated and fined for discharging untreated st then it deserves to.Macquarie are the "vampire kangaroo" asset manager (that is, they are the aussie version of the "vampire squid" -- Goldman). They were allowed to get away with this nonsense, and should be scrutinised for it on current+future UK business.
The pension schemes(OMERS and USS) that have invested in Thames Water after Macquarie had left are really solid investors -- they are the sort of private investors you actually want for core infrastructure if it's to be private at all (stable, not too money-grabbing, built for the benefit of pensioners not psycho bankers).
Letting Thames Water go to the wall (it's already got a Fitch CCC credit rating, meaning "Substantial credit risk, Very low margin for safety. Default is a real possibility") would not help it fund the infrastructure it needs, it'd just make that harder and more expensive.
Shooting the decent new stablehand because the horse bolted after the previous stablehand f
ked off doesn't help. It hurts.Reset the thought for a second -- what you actually want is a water system for the Thames valley that works, yes?
That is going to need funding. That'll be borrowing. You want to be able to do that cheaply. Burning the lenders isn't helpful in that.
You want to stop sewage outflows? Give Ofwat (or its successor, as it's clearly useless) teeth. Give them the power to impose sanctions that don't allow outflows of funding until the sewage stops going into rivers and the sea.
You want to cut down on leaks? That will need funding since the infrastructure replacements won't be cheap. You need to find that over a long term, 20+ years, and that means stable ownership and contracts, not the 5 years b
ks that's being attempted.You want to stop this sort of bulls
t happening again? Regulate it out of the possible.For the record, this happened under Brown/Blair and continued under cameron-clegg then cameron II. It's not a Labour or Tory thing particularly, it's a failure to regulate.
The private sector is absolutely great at moving money to investors. In this case it did so without having to make a working water company.
CraigyMc said:
The pension schemes(OMERS and USS) that have invested in Thames Water after Macquarie had left are really solid investors -- they are the sort of private investors you actually want for core infrastructure if it's to be private at all (stable, not too money-grabbing, built for the benefit of pensioners not psycho bankers).
Letting Thames Water go to the wall (it's already got a Fitch CCC credit rating, meaning "Substantial credit risk, Very low margin for safety. Default is a real possibility") would not help it fund the infrastructure it needs, it'd just make that harder and more expensive.
That makes no sense at all; they cannot be good investors but also dullards who missed that they were buying a debt-laden zombie waiting to die. The fund managers are still getting their P45s unless you can convince me otherwise.Letting Thames Water go to the wall (it's already got a Fitch CCC credit rating, meaning "Substantial credit risk, Very low margin for safety. Default is a real possibility") would not help it fund the infrastructure it needs, it'd just make that harder and more expensive.
CraigyMc said:
Macquarie are the "vampire kangaroo" asset manager (that is, they are the aussie version of the "vampire squid" -- Goldman). They were allowed to get away with this nonsense, and should be scrutinised for it on current+future UK business.
The pension schemes(OMERS and USS) that have invested in Thames Water after Macquarie had left are really solid investors -- they are the sort of private investors you actually want for core infrastructure if it's to be private at all (stable, not too money-grabbing, built for the benefit of pensioners not psycho bankers).
The pension schemes, and all other investors, bought into the business after the debt was already there, any cursory due diligence would have shown that. It creates a huge moral hazard if you expect regulated business to be allowed to raise prices simply because they can't pay back their debts, or because they now have "good" investors. The pension schemes(OMERS and USS) that have invested in Thames Water after Macquarie had left are really solid investors -- they are the sort of private investors you actually want for core infrastructure if it's to be private at all (stable, not too money-grabbing, built for the benefit of pensioners not psycho bankers).
Thames Water customers should not be expected to pay for the lack of due diligence or poor decisions of investment managers, no matter who the investors are - other water companies do not have such large issues and so it is not a structural problem in the water industry, it is a problem entirely created by Macquarie, and bought by current shareholders.
The only reason shareholders require a return is because they take the risk of the business going bust. If you remove the risk of it going bust then the rate of return they should get will be exceptionally low.
"You want to stop sewage outflows? Give Ofwat (or its successor, as it's clearly useless) teeth. Give them the power to impose sanctions that don't allow outflows of funding until the sewage stops going into rivers and the sea."
That'll be the power (actually a Duty) Ofwat has had since its formation in 1989 then.
That'll be the power (actually a Duty) Ofwat has had since its formation in 1989 then.
hidetheelephants said:
CraigyMc said:
The pension schemes(OMERS and USS) that have invested in Thames Water after Macquarie had left are really solid investors -- they are the sort of private investors you actually want for core infrastructure if it's to be private at all (stable, not too money-grabbing, built for the benefit of pensioners not psycho bankers).
Letting Thames Water go to the wall (it's already got a Fitch CCC credit rating, meaning "Substantial credit risk, Very low margin for safety. Default is a real possibility") would not help it fund the infrastructure it needs, it'd just make that harder and more expensive.
That makes no sense at all; they cannot be good investors but also dullards who missed that they were buying a debt-laden zombie waiting to die. The fund managers are still getting their P45s unless you can convince me otherwise.Letting Thames Water go to the wall (it's already got a Fitch CCC credit rating, meaning "Substantial credit risk, Very low margin for safety. Default is a real possibility") would not help it fund the infrastructure it needs, it'd just make that harder and more expensive.
The USS is the UK's largest pension scheme, ~£91bn under management.
Here's their statement on Thames Water recently: https://www.uss.co.uk/news-and-views/latest-news/2...
OMERS website is built not to allow visits from here, but they are also making decent long-term returns (~7%) C$120bn AUM and are a stable scheme.
The large investors are basically refusing to throw good money after bad at this point. It'll probably be nationalised, some deal done with the investors to give them a reason to stay invested, and UK taxpayers will effectively underwrite the saga. But of course I could be wrong.
Bonefish Blues said:
"You want to stop sewage outflows? Give Ofwat (or its successor, as it's clearly useless) teeth. Give them the power to impose sanctions that don't allow outflows of funding until the sewage stops going into rivers and the sea."
That'll be the power (actually a Duty) Ofwat has had since its formation in 1989 then.
Noted and agreed. Bolded, even.That'll be the power (actually a Duty) Ofwat has had since its formation in 1989 then.
CraigyMc said:
Bonefish Blues said:
"You want to stop sewage outflows? Give Ofwat (or its successor, as it's clearly useless) teeth. Give them the power to impose sanctions that don't allow outflows of funding until the sewage stops going into rivers and the sea."
That'll be the power (actually a Duty) Ofwat has had since its formation in 1989 then.
Noted and agreed. Bolded, even.That'll be the power (actually a Duty) Ofwat has had since its formation in 1989 then.
king job and back it when it does'?CraigyMc said:
They are both pretty successful pension schemes in general.
The USS is the UK's largest pension scheme, ~£91bn under management.
Here's their statement on Thames Water recently: https://www.uss.co.uk/news-and-views/latest-news/2...
They are lying when they say they are not taking money out of the business. The are getting 8% on the £500m loan from last year.The USS is the UK's largest pension scheme, ~£91bn under management.
Here's their statement on Thames Water recently: https://www.uss.co.uk/news-and-views/latest-news/2...
Who knows what interest rate they are demanding for the next £3.25bn, but I suspect the 40% price rise is needed to cover their demand.
Condi said:
The only reason shareholders require a return is because they take the risk of the business going bust. If you remove the risk of it going bust then the rate of return they should get will be exceptionally low.
Sorry, point of correction - remove risk and the *risk premium* should get lower. Unfortunately since these days there is a much higher risk-free rate (= the yield on government bonds) and a corporate interest rate is roughly risk-free rate plus risk premium, the required nominal rate of return is still quite high. Edited by Whoozit on Friday 29th March 09:34
In order to fix the problem, i.e. stop the sewage discharges, a very large investment will be needed. The key question is how that will be funded. I'd imagine that further borrowing by Thames Water itself is not feasible, given current gearing (or is it? Anyone know for sure?). TW's major shareholders have already refused to inject more equity funds, AIUI.
So it's down to either TW's customers and/or the British Government. Saying to hard pressed customers "Sorry, but due to previous mismanagement you guys are now going to see your bills increase by x%" is politically impossible. That leaves government borrowing, which would imply state ownership - perhaps temporary - of TW, I'd have thought.
Oh, and abolish Ofwat and replace it with a proper regulator fit for purpose.
So it's down to either TW's customers and/or the British Government. Saying to hard pressed customers "Sorry, but due to previous mismanagement you guys are now going to see your bills increase by x%" is politically impossible. That leaves government borrowing, which would imply state ownership - perhaps temporary - of TW, I'd have thought.
Oh, and abolish Ofwat and replace it with a proper regulator fit for purpose.
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