Thames Water creditors eye board shake-up if takeover plan succeeds

Creditors outline leadership changes

A group of creditors seeking control of Thames Water has proposed appointing several experienced industry figures to the utility's board if its takeover and recapitalisation plan is approved. According to reports from City A.M. and The Guardian, the London & Valley Water consortium, known as L&VW, intends to install Liz Barber, the former chief executive of Yorkshire Water, and Clive Selley, the former chief executive of BT Openreach, as non-executive directors. Dame Bernadette Kelly, a former permanent secretary at the Department for Transport, would also join the board.

Mike McTighe, a turnaround specialist who currently chairs Openreach and has been advising Thames Water, would become the new chair, replacing Sir Adrian Montague, as reported by The Guardian. City A.M. similarly noted the appointments of Barber, Selley, McTighe and Kelly under the creditors' plan. McTighe commented on the scale of the task ahead, saying: "The challenge at Thames Water is huge. If this recapitalisation plan is accepted, we will apply full dedication as a new board, working alongside the executive team to transform the business and build a culture in which the customers and local communities who depend on Thames Water come first." Both outlets carried this statement.

The Guardian identified L&VW as a consortium of 100 institutional investors holding £17 billion of the company's approximately £21 billion debt, with participants including Apollo Global Management, Elliott Management, Farallon Capital Management and Silver Point Capital. City A.M. described the group as including heavyweight investors such as Apollo and Elliott. The consortium has hired Pallas Partners and Akin Gump for legal representation, according to The Guardian.

Details of the recapitalisation proposal

L&VW's plan would keep Thames Water in private ownership, with an eventual re-listing on the London Stock Exchange, City A.M. reported. The Guardian noted that creditors aim to list the company on the stock market as early as 2030. As part of the proposals, investors have said they will not take dividends for 10 years, with all profit invested back into the business, according to City A.M. McTighe described the 10-year plan as one that would "fix the foundations" at Thames Water, The Guardian reported.

Russ Mould of AJ Bell commented on the proposed appointments, saying the hope is that credible names can inspire confidence, as carried by The Guardian. The moves are presented by the creditors as a way to demonstrate a leadership overhaul alongside any commercial deal.

Thames Water has been operating under a near £20 billion debt pile and warned last month that it would run out of cash by the end of the year, City A.M. reported. The Guardian referred to the company's debt at around £21 billion in the context of the creditors' holdings.

Political and regulatory context

Ministers have been considering placing the company into a special administration regime, a form of temporary nationalisation that would impose substantial losses on investors, according to City A.M. The Guardian reported that such a regime would transfer running costs to the taxpayer, with Thames Water claiming the bill could amount to £2 billion. Andy Burnham has repeatedly called for "greater public control" of utility companies. He previously indicated to The Guardian that this could involve nationalisation through the special administration regime.

The prime minister said he was "angry" after companies including Thames Water received approval to raise bills earlier this month, and stated that companies must not treat bill payers like a "blank cheque," The Guardian reported. Creditors' plans faced earlier setbacks when Emma Reynolds, then environment secretary, wrote to Ofwat in June voicing concerns, according to The Guardian. City A.M. noted that Reynolds, as former environment secretary, dismissed L&VW's turnaround plan earlier this year.

Competing views on the path forward

The proposed board changes have drawn sharp criticism from campaigners. Cat Hobbs, director of the public ownership group We Own It, described the plan as "absolutely absurd" and "a cosy stitch-up that has nothing to do with the interests of the 16 million people who depend on Thames Water," adding that it amounts to "nothing more than a reshuffling of chairs on the deck of the Titanic," as reported by The Guardian.

Supporters of the creditors' approach frame the appointments and recapitalisation as a means to stabilise the company without transferring costs to the public purse, while keeping it under private ownership with a long-term commitment to reinvestment and no dividends for a decade. Those favouring greater public involvement, including Burnham, see temporary nationalisation or enhanced public control as necessary responses to the utility's difficulties. The government continues to weigh these options as the company's financial pressures mount.

The outcome will determine whether Thames Water remains under creditor-led private ownership with a refreshed board or moves into a special administration process.