(Reuters) – U.S. investment group KKR is in talks with British company Thames Water and its advisers to participate in a 3 billion pound ($3.88 billion) share sale as part of a larger recapitalization plan. wide, Sky News reported on Saturday.
Both Thames Water and KKR declined to comment.
Thames Water, which serves around 16 million people in and around London, is at the center of a crisis over sewage discharges, deteriorating pipe networks and huge debts.
The company, Britain's biggest water supplier, said in October it had lined up a financial lifeline of up to £3 billion with some of its creditors in a deal that, if approved, will help it survive for at least another year. .
KKR is among a small number of investors studying Thames Water's finances with a view to supporting a rescue share sale, the report said, citing people familiar with the matter.
KKR's decision depends on a final decision from water regulator Ofwat, due by January at the latest, according to the report. It was unclear which of KKR's funds was involved in Thames Water's capital raising, Sky News added.
However, one obstacle to KKR buying a large stake in Thames Water may be its 25% stake in Northumbrian Water, according to the report.
Under Ofwat's merger regime, the Competition and Markets Authority would need to review the deal, although there would be no automatic ban, Sky News said.
The British government has been prepared to place Thames Water into special administration given the risk of financial collapse.
($1 = 0.7736 pounds)
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