The complex corporate structure of Thames Water will be put under strain by the financial crisis that has engulfed the water provider.
It was revealed that Trinzic Operations Ltd., which is owned by Thames parent company Kemble Water Holdings in the end, will be shut down voluntarily.
Sources say that Trinzic is being liquidated by members, which means a solvent business is shutting down. Kemble wants to recover more than £25m.
The Insolvency Service has confirmed that 37 employees of the company will be laid off. This company was established to develop floating Solar Projects on Thames Sites in order to boost its renewable energy generation. Job losses will begin at the end this month. Thames may offer some employees new roles.
Thames reportedly told Trinzic that it would not transfer assets to Trinzic, or enter into any commercial agreements with it following a U turn by investors in March on £500m pledged funding. Trinzic, despite efforts to find additional investment, will be shut down.
Sources close to Thames have confirmed that Kemble is “urgently trying” to recover money from Trinzic. Consultants at Alvarez & Marsal are working with Kemble on assessing its options.
After the money needed for restructuring has been spent, it is not clear if any of the funds recovered by Trinzic after that will be distributed to external investors.
Trinzic’s senior executives are expected to receive large payouts, which could exceed 12 months of salary. Most of the staff will receive redundancy pay equivalent to at least three month’s salary.
Thames Water has a debt of 15.2 billion pounds sterling and announced last week that it only had enough funding to operate its operations up until June next year. It is likely that if it fails, it will be temporarily nationalised. Thames has been placed under special measures by the regulator Ofwat.
It was reported in April that Kennet Properties – a company that develops land that Thames no longer needs – paid out a £14.5m dividend for the year ending 31 March 2023, despite the challenges faced by the group.
Sources close to Kemble at the time said that the Kennet dividend ultimately reached Trinzic. Both companies are outside of the ringfenced company that is regulated and governed by Ofwat in Thames’s complicated structure.
Transfers of funds among the group’s companies are being scrutinized as Thames struggles, and the legacy of former owners is examined. extracted huge dividends for a period of time . Ofwat is examining two sets of dividends of £37.5m (October) and £158m (March).
Trinzic, which was formerly known as Thames Water Ventures, was founded in 2021 by Tony Vasishta. Tony Vasishta is a former executive of Liberty Global’s real estate division.
The goal was to use land that the household water provider no longer required to build projects to generate solar power, store energy, and harness heat from waste networks to provide clean energy. The electricity produced would be sold to Thames, a large energy consumer with a £220m bill. This would reduce its costs and emissions.
Documents from April indicate that Thames believes Trinzic is “significantly” behind its original forecast. The project was expected to produce almost 4,000 megawatts of electricity by 2024. However, it is on track to produce only 1,000MWh at that time, according to the document. Thames has already abandoned a goal to reach net zero by 2030.
Documents stated that the Thames Water Utilities Ltd, a regulated company, would fund an initial seven project sites between 2020 and 2025. “With a view to selling to Trinzic once completed”, said documents.
They said, however, that a contractor “raised concern about TW’s finances”, causing delays.
It said that delays were expected at sites in Little Marlow and Iver South, as well as Swindon.
Sources claim that Thames and Trinzic executives struggled to find an agreement on a business model that would benefit both parties. Thames was concerned about taking too much risk in attempting to reach a 25-year deal.
Kemble refused to comment.
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