Emeritus Prof Christopher MayApr 5, 2024

And so it begins.... Thames Water's parent company has formally defaulted on its debt....

Next step, restructuring.... and guess what there's a lot of advisors & investment bankers who will be skimming off some nice fat fees from the mess.

Things are likely to get (even) worse before they get (sightly) better!

#ThamesWater

h/t FT

Show threadJim Patterson 🇨🇦Apr 5, 2024
@ChrisMayLA6 And, of course, they've been piling on debt as they pay out dividends to their shareholders for years.
According to #TheGuardian's figures, shareholder dividends over the past 30 years are close to half of what they took on in debt. Aren't dividends supposed to be paid out of a company's profits?
https://www.theguardian.com/business/2023/jun/30/in-charts-how-privatisation-drained-thames-waters-coffers
In charts: how privatisation drained Thames Water’s coffers

Decades of underinvestment and bumper dividends have left the firm debt-laden and under investigation

The Guardian
Show threadEmeritus Prof Christopher MayApr 6, 2024

@SheamusPatt

indeed, but its not an uncommon practice to take on debt to pay dividends - the justification being to smooth out payments across the years.... the reality is that most board members & executive are shareholders & want to see their payments maintained.

Show threadJim Patterson 🇨🇦Apr 6, 2024
@ChrisMayLA6 I'm quite sure it's common practice, but I think it's being abused more and more - drowning a company with debt so as to pay off the investors, as appears to have happened with #ThamesWater as well as many other victims of #PrivateEquity. Found an article on the dangers here (you may have read it as it mentions Thames Water). I'm in #Canada so only watching it from afar.
https://annpettifor.substack.com/p/private-equity-as-public-debt
Private Equity as Public Debt

Financial Capitalism's uncanny resemblance to Soviet-style economics

System Change
Show threadJim Patterson 🇨🇦
@ChrisMayLA6 #Canada was spared the worst of the consequences of the #privatization push as happened in the #UK. #PM at the time #BrianMulroney was swept up in it but fortunately had no jurisdiction over municipal assets similar to #ThamesWater as that's #provincial jurisdiction here. He did sell off #AirCanada and #PetroCanada https://policyoptions.irpp.org/magazines/march-2024/mulroney-welfare-state/ #cdnpoli #ukpoli
Brian Mulroney and the stealth privatization of the state

In addition to the sale of Crown corporations, the Mulroney era saw the transformation of universal programs into selective ones. It changed the spirit of the Canadian welfare state.

Policy Options
Apr 6, 2024 at 4:45pmWeb