(Bloomberg) -- A group of creditors that hold Thames Water’s riskiest debt are consulting with a law firm to advise them in talks with the company.
Some holders of Class B securities have tapped Quinn Emanuel Urquhart & Sullivan LLP for legal advice, according to people familiar with the matter, who spoke to Bloomberg on the condition of anonymity. The group includes investment funds, banks and insurers, said the people. A representative for Quinn Emanuel Urquhart & Sullivan didn’t immediately respond to a request for comment.
The move to seek Quinn Emanuel’s counsel bands some of the creditors together and gets them representation during talks with Thames Water. Some of the Class B holders were previously part of a wider group that included creditors that hold either the Class A bonds alone or a combination of the higher and lower-rated securities.
The company’s second-lien debt is roughly £1.4 billion ($1.8 billion), a fraction of the almost £14.8 billion of Class A debt in the firm’s capital structure, according to the company’s presentation to investors in July.
Creditor negotiations with the company are currently running in parallel to an equity fund-raising process carried out by the company and its advisers at Rothschild & Co. Thames Water is looking to raise £3.25 billion in equity to fix chronic leaks and sewage spills as well as cope with a growing population and climate change. The wider group of mostly Class A holders has been working for months on a proposal to rescue the company, which includes the provision of emergency liquidity.
The Class B debt has been trading at deeply distressed levels. The £250 million notes due in 2027 are currently quoted at around 16 pence on the pound sterling, according to pricing compiled by Bloomberg.
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