UK approaches potential managers for Thames Water

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The UK government has joined the consultation on taking on the role of a special regulator as a sign that ministers are committed to reform. Thames water.

Consultancies including Teneo, Interpath and EY are among those who may be able to run the so-called special management regime, according to people familiar with the process. SAR is a temporary measure designed to keep services running, and suppliers and workers paid, when business goes down.

One officer said: “We are ready, we could do one (SAR} today, if we had to do that.” In fact, SAR preparation is also a process is the most powerful we as a government can have to ensure that a market-led, led solution is found.”

Thames Water is struggling under its £19bn debt and has warned it will go bankrupt in March unless the High Court signs off. a controversial £3bn loan at the hearing in early February.

A government official said that there had been “informal discussion” and some consultation on the special role of managers but no formal discussion process.

Steve Reed, the environment secretary, said in October that he had “removed the country”.

Officials insist that taking the company to SAR will not be national even if it is a major government operation.

But putting Thames Water into special administration may be inevitable if a court blocks a debt deal with senior creditors, or if the company goes bankrupt prematurely. expected. The £3bn loan is controversial because it would have an interest rate of 9.75 per cent plus fees and incentives for existing management of Thames Water.

The deal is being challenged by a separate group of small creditors of Thames Water – who have proposed a cheaper deal – and by environmentalists who argue that. the company could be better in a special system.

The loan would buy the company time to raise at least £3bn of equity through the same process. Companies including Castle Water, Covalis and CKI Infrastructure are among the investment groups to make a line to enter potential applications for use.

Consumers and creditors are waiting to see if the company appeals to the Competition and Markets Authority over Ofwat’s decision last month on the situation. water companies can increase customer bills in the next five years. Thames Water has not yet decided whether to appeal Ofwat’s decision to the CMA, according to people familiar with the matter.

Ofwat said so Thames will be allowed raising debt by 35 per cent – much lower than the 59 per cent increase it had sought – would take average debt from £436 now to £588 between now and 2030.

The Department for Environment, Food and Rural Affairs, Thames Water and Ofwat did not respond to requests for comment.

EY, Teneo and Interpath declined to comment.

In a presentation to the market on Wednesday, the company’s chief executive officer, Julian Gething, said: “Our strategy provides clients and stakeholders by unlocking up to £3bn of new capital. and securing a total of £3.5bn of credit growth over the next two years and freeing up capital, so we can continue to invest the billions of pounds needed to improve the stability of the network. us.

“We believe it is the only solution that can be used to facilitate the equity investment needed to provide long-term stability and certainty and will not affect consumer credit.”

The government’s selection of a director may be complicated by potential conflicts of interest. Teneo is already a consultant to Thames Water and has received £5mn in fees from August 2023. It had also received at least £60mn to run a special scheme Fallen power supply Bulbaccording to the National Book Office.

It has also written a report to the High Court in favor of lending to creditors above £3bn, while Interpath has written a separate report on behalf of smaller creditors.

Sir Dieter Helm, a professor of economics at Oxford University, argued that the SAR would help Thames Water focus on restructuring and reforms, rather than negotiating with creditors.