Investors pursuing a rescue bid for Thames Water have proposed a 'golden share' for the government, aiming to avert nationalisation. The consortium, London & Valley Water (L&VW), represents 100 institutional investors holding £17bn of Thames Water's £21bn debt. They acknowledged the new prime minister's desire for greater public control and accountability for the water company.
Golden share proposal
On Tuesday, the creditors announced they are crafting a revised rescue package that includes a golden share. This would grant the government veto power over major decisions and hostile takeovers. L&VW stated, 'The consortium is willing to make significant new commitments to grant greater controls and oversight to ministers, implemented through a ‘golden share’.'
However, the GMB union opposed the plan. Gary Carter, a national officer, said, 'GMB believes now is the time for Thames Water to come back into public ownership. The private sector owners of Thames Water have failed consumers, the environment, and the workforce. The government must take decisive action and nationalise Thames Water.'
Context and other golden shares
The government already holds golden shares in companies like Rolls-Royce and Royal Mail, the latter acquired during the takeover by Czech billionaire Daniel Křetínský's EP Group two years ago. In 2022, the National Security and Investment Act expanded government powers to block foreign takeovers on national security grounds.
Details of the rescue deal
L&VW's proposed £10bn rescue deal includes a 10-year dividend ban or until Thames Water becomes publicly listed, and an expansion of the social tariff to reduce bills for struggling households. This follows reports that Burnham plans to place the company into a special administration regime (SAR), a temporary public ownership form. Burnham stated last month that 'greater public control' is needed, potentially meaning nationalisation.
A spokesperson for L&VW said, 'Under our plan, customers will have strong protections, regulators and government will have enhanced oversight, and there will be greater controls to ensure Thames Water delivers the record investment needed to improve environmental and operational performance. The consortium is eager to engage with new ministers to discuss their priorities and present a revised proposal.'
Political and financial pressures
Thames Water serves 16 million customers in London and the Thames Valley and is burdened by debt interest payments since privatisation. The SAR proposal would transfer running costs to taxpayers, with creditors estimating a £2bn bill. Earlier this month, creditors indicated they would continue their bid even if temporary nationalisation occurred.
The lenders have sought ownership after a failed sale to US investment group KKR last year. However, doubts arose when former environment secretary Emma Reynolds wrote to Ofwat voicing concerns about the deal. On Monday, Angela Eagle replaced Reynolds in Burnham's new cabinet. On Tuesday, Thames Water implemented a temporary hosepipe ban.
