Thames Water creditors propose changing board composition
A consortium of Thames Water creditors has proposed changing the composition of the company’s board of directors as part of a £10 billion recapitalisation plan. The initiative is intended to persuade the government to approve the deal and avoid the company’s possible temporary nationalisation, The Guardian reports.
Proposed management changes
London & Valley Water (L&VW), a consortium of around 100 institutional investors, holds £17 billion of Thames Water’s total £21 billion debt. If creditors are allowed to gain formal control of the company, they plan to appoint former Yorkshire Water chief executive Liz Barber and former Openreach network operator chief executive Clive Selley to the board.
They also plan to bring Dame Bernadette Kelly, the former permanent secretary of the UK Department for Transport, onto the board. Mike McTighe, who is leading Thames Water’s restructuring and is currently chairman of Openreach, could replace Sir Adrian Montague as board chair if the government approves the £10 billion rescue plan.
McTighe said that the challenge for Thames Water is significant. According to him, if the recapitalisation plan is approved, the new board will work with the executive team on transforming the company and on an approach that prioritises customers and local communities.
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Criticism and possible special administration
The public campaign group We Own It criticised the creditors’ proposal. Its director, Kat Hobbs, called it absurd and said it does not serve the interests of the 16 million people who depend on Thames Water, but merely changes the people in management.
Andy Burnham had previously spoken about the need to strengthen state control over Thames Water and did not rule out nationalisation. One possible mechanism is a special administration regime, which is a form of temporary nationalisation. Thames Water’s creditors estimate that the cost of operating the company under such a scenario could reach £2 billion for taxpayers.
L&VW includes Apollo Global Management, Elliott Management, Farallon Capital Management and Silver Point Capital, among others. The consortium has also hired law firm Pallas Partners, which will work alongside Akin Gump, the creditors’ adviser on restructuring terms. The creditors are seeking ownership of Thames Water after a failed attempt to sell the company to US investment group KKR last year.
