Super sewer contractors safe from Thames Water crisis

Grant Prior 12 months ago

Contractors working on the £4.1bn Thames Tideway project will still get paid whatever happens to debt stricken client Thames Water.

The company told the Enquirer that the massive infrastructure project will not be hit by doubts over its financial future.

A debt mountain of £14bn has left Thames Water on the brink of possible administration as it scrambles for cash from investors.

Some of the industry’s biggest names including Ferrovial, Laing O’Rourke, BAM Nuttall,Morgan Sindall, Balfour Beatty,Costain, Vinci and Bachy Soletanche are working on the super sewer project.

Thames Water former chief executive Sarah Bentley left suddenly this week as the firm fights for its future amid restructuring plans.

One source close to the talks said: “Obviously it’s a major crisis but whatever happens the firms working on major infrastructure projects will be looked after otherwise no-one will work for whoever owns Thames Water in the future again.”

Peter Kubik, Partner in the Turnaround and Recovery team at UHY Hacker Young, the national accountancy group said: “The uncertainty over Thames Water is a real concern to its contractors and other suppliers. In any insolvency procedure they risk taking a very substantial haircut. If it was a normal insolvency process, as opposed to a Government backed rescue, then a trade creditor would normally get just pennies in the pound on what they are owed.

“Contractors to Thames Water will down tools unless they can get guarantees that they will be paid for the new work they do. If that happens then there is a risk that essential work on Thames Water’s infrastructure, such as repairs, doesn’t get done.

“Suppliers to other heavily indebted water companies like Southern Water, SES Water and Yorkshire Water are going to have similar concerns.

“It is hoped that trade creditors and employees will be paid in full if Thames Water goes into special a special administration but that is by no means guaranteed. We would be extremely surprised if the Government were not to protect the credit balances that customers have with Thames Water.”


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