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The creditors seeking to gain control of Thames Water have opened the door to greater public control of the struggling utility in a bid to bring Andy Burnham’s team to the negotiating table.
Mike McTighe, the turnaround specialist who has been working with the group on an overhaul of Thames Water’s board, has called on the incoming Prime Minister to sit down for talks to discuss the company’s future.
The incoming Prime Minister is expected to push Thames Water into a special administration regime (SAR) and pull it into public control, as he pushes for greater public ownership of utilities.
In a bid to secure a last-ditch deal, the creditors have softened their previously rejected rescue bid and said they are willing to consider greater public control over the firm.
“We fully recognise that Thames Water is a crucial part of our critical national infrastructure. We will work with Andy Burnham, his Government and local authority leaders to rebuild confidence in Thames Water and the wider sector,” McTighe said
“We are keen to meet new ministers as soon as possible to discuss how we can work together in the best interests of customers, including by enhancing public control of the company’s operations.”
Administration could cost £4bn
The SAR proposal reportedly favoured by Burnham could saddle the taxpayer with a bill of up-to £4bn, a report from administration firm Teneo found.
“If it is going to cost the taxpayer £2bn to keep the company afloat then the taxpayer needs to receive something in return; that means control, so that we can fix the company and secure the water supply for thousands of families and businesses,” a Burnham ally told The Sunday Times.
But the creditors battling for control of Thames Water are understood to be pushing for a proposal which does not burden the taxpayer with the billion-pound bill for overhauling the utility’s ageing infrastructure.
“We remain ready and willing to recapitalise Thames Water, return it to investment grade, and begin the long process of turning it around. We urgently need Government engagement to begin that process,” McTighe said.
The consortium of Thames Water’s creditors hopes to woo Burnham with a rescue proposal to inject £3.35bn of fresh equity alongside £6.25bn of new borrowing while writing off £9.6bn of existing debt.
But City AM understands that there has still been no engagement between these creditors and Burnham’s team.
Powell: Burnham taking on ‘privatisation model’
The consortium, which includes Apollo Global Management, Elliott Management, Farallon Capital Management and Silver Point Capital, holds roughly £17bn of Thames Water’s £21bn debt pile.
McTighe, a turnaround specialist, is working with these creditors on a plan to restructure the company’s debt and set up a new board, of which he would be chair.
Lucy Powell, the deputy leader of the Labour Party, said on Sunday that Burnham wanted to challenge “the privatisation model” for utilities including as Thames Water.
“Andy’s been really clear that that model is something that he wants to look at and take on, so that these things work in the interests of ordinary consumers and bill payers,” she told Times Radio.
“The government already has powers to step in if necessary and has powers for special measures, as it’s called,” she added.
