Investors in Thames Water have expressed willingness to discuss enhanced public control of the utility, following reports that new Prime Minister Andy Burnham may temporarily nationalise the struggling company.
Mike McTighe, a turnaround expert working with Thames Water's principal creditor group, said UK and international investors are ready to engage with the incoming government to rebuild confidence in the debt-burdened firm. The company is grappling with £20 billion in debt.
Creditors seek government talks
McTighe stated: "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. 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."
Burnham, who began his role as prime minister on Monday, July 20, has previously supported greater public control of essential utilities, including water services. Media reports suggest he is considering placing the company into a special administration regime (SAR) as a temporary nationalisation measure.
Financial challenges and rescue plans
Thames Water's annual report, published last week, highlighted "material uncertainty" over its ability to secure enough liquidity to navigate towards a viable rescue strategy. A rescue proposal from creditors is seen as the last alternative to prevent SAR, following the breakdown of a previous bailout agreement with American private equity firm KKR in May last year.
Creditors have been forced to revisit their proposals after Environment Secretary Emma Reynolds indicated last month that their £10 billion strategy for Thames Water falls short of adequately safeguarding customers or environmental standards. Thames Water has warned that an SAR would require taxpayers to finance operations to the tune of £2 billion by the end of next year, as reported by the Sunday Times.
Commitment to rebuilding trust
The firm's creditors are reportedly prepared to negotiate additional compromises to their rescue package to avoid burdening taxpayers with the cost of maintaining operations and upgrading deteriorating infrastructure. McTighe, who is spearheading reforms to Thames Water's governance structure, commented: "It will take time to fix a complex business like Thames Water, but we are committed to rebuilding trust with the customers and public we serve."
