Thames Water’s creditors are preparing a new boardroom team as they seek to secure government approval for a rescue of Britain’s biggest water supplier and avert a collapse into state administration.
The London & Valley Water consortium has proposed four new directors, including Liz Barber, the former chief executive of Yorkshire Water, in an attempt to strengthen governance and convince ministers that the embattled utility can be rebuilt under private ownership.
Dame Bernadette Kelly, the former permanent secretary at the Department for Transport, and Clive Selley, former chief executive of BT Openreach, are also being lined up for non-executive roles.
Infrastructure specialist Mike McTighe has already been proposed as chairman.
The appointments are designed to address one of the central concerns surrounding the rescue: whether a heavily indebted utility serving about 16 million customers can be turned around without ultimately falling into public ownership.
The consortium, which includes Elliott Management, Aberdeen Investments and Apollo Global Management, is seeking government backing for its revised recapitalisation plan. It has also explored offering ministers a “golden share” as part of the deal.
The stakes are high. Thames Water carries more than £20 billion of debt, about £17 billion of which is held by the creditor group. The company has warned it could run out of cash as early as October, leaving little room for another failed rescue attempt.
A previous deal involving US private equity group KKR collapsed last May, increasing the likelihood of Thames Water entering a special administration regime if creditors cannot agree terms with the government and regulator Ofwat.
The latest proposal follows another setback in June, when former environment secretary Emma Reynolds warned that a £10 billion creditor-backed plan did not go far enough to protect customers or the environment.
The government has historically favoured a private-sector solution for Thames Water, despite growing political pressure for nationalisation. Prime Minister Andy Burnham has separately signalled support for a 10-year programme to bring the water industry back into public ownership.
That leaves ministers attempting to reconcile an immediate financial rescue with a longer-term political commitment to reform the sector.
Mike McTighe, the proposed new chairman, sought to present the consortium as a vehicle for restoring confidence rather than simply restructuring Thames Water’s balance sheet.
“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,” he said.
“We will focus relentlessly on protecting public health and safety, respecting and improving the local environment, ensuring what people pay for their water is fair and the most vulnerable are protected, investing to secure clean and reliable water supplies for current and future generations, and being accountable for what we do.
“It will take time to fix Thames Water, but we are committed to rebuilding trust with the customers and public Thames Water serves.”
The consortium hopes to secure approval from Ofwat and the government this autumn.
The arrival of Dame Angela Eagle as Environment Secretary adds another layer of uncertainty. She was appointed by Burnham last month and has yet to meet the creditor consortium over its rescue proposal.
For Thames Water, the boardroom appointments are therefore about more than corporate governance. They are part of a final attempt to persuade ministers that the company can remain in private hands — at a moment when the government is already preparing the political ground for the opposite outcome.
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