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Thames Water is weighing a last-ditch rescue from a former Liberal Democrat peer working with a little-known monetary companies agency, which claims it could actually unpick the teetering utility’s advanced company construction to higher serve the surroundings.
Lord Rupert Redesdale, the previous Liberal Democrat power spokesman, has been serving to put together a possible bid for Thames Water from Muinín Holdings, a Mayfair-based funding agency, in accordance with individuals acquainted with the matter.
Redesdale is chief govt officer of The Water Retail Firm, a specialist provider of water to companies. Redesdale, a member of the aristocratic Mitford household, joined Muinín as a director final month in preparation for a bid.
The method comes as water regulator Ofwat is evaluating a backup £5bn rescue plan from Thames Water’s collectors, the one supply left on the desk after US personal fairness agency KKR walked away from a bid final month.
Thames Water, which is struggling beneath practically £20bn of debt, has not formally reopened its fairness bidding course of and has as a substitute centered on the proposal put ahead by these top-ranking collectors, which embrace US hedge funds Elliott Administration and Silver Level Capital.
“We are going to think about all bids put to us,” Thames Water’s chair, Sir Adrian Montague, mentioned in correspondence revealed by a parliamentary committee on Wednesday. Montague revealed that CK Infrastructure and Citadel Water — which each made preliminary bids earlier this 12 months — had additionally indicated a “potential willingness to re-engage”.
He added that an unknown entity known as Titanium had approached Thames Water, together with “a person linked with the water trade with a top level view plan to recapitalise Thames Water by tokenisation of debt however with no or low fairness injected”.
Montague was latterly referring to Muinín, though the corporate has determined in opposition to tokenisation, in accordance with individuals acquainted with the state of affairs.
The bondholders may even maintain enormous sway over any bid due to the massive quantity of debt that must be restructured.
Muinín has just lately met members of the creditor group and their advisers. It has additionally held conferences with different stakeholders, together with Thames Water’s union representatives and regulators.
It plans to boost new bonds from an funding automobile chaired by Redesdale known as River Water Strategic Investments. This might increase as a lot as £500mn in short-term financing to stabilise the utility, with plans for Thames Water itself to later concern an additional £5bn bond to bolster its infrastructure and environmental requirements.
Thames Water’s present debt could be shifted exterior the regulated entity and into a brand new construction, the place the varied lessons of collectors might earn a return from a future inventory market itemizing. Muinín claims that the utility might be valued at £21bn in an IPO in three years’ time.
An individual near the bondholders mentioned that Muinín’s proposal would require their approval to shift their debt right into a “distant” automobile, which might set off large writedowns, and so is “not one thing that will ever be deliverable and admittedly would create contagion”.
Redesdale final month dropped his Liberal Democrat affiliation and shifted to changing into an impartial member of the Home of the Lords, so as to protect his political freedom.
He would additionally step down from his govt and board function at The Water Retail Firm if a bid proceeded, though he would retain a stake within the enterprise, in accordance with individuals acquainted with the matter. The corporate itself shouldn’t be a celebration to the potential bid.
“Our proposed bid is about constructing belief within the monetary stability of Thames Water while additionally closely investing within the surroundings,” Redesdale advised the Monetary Instances.
“The proposed bid won’t require any derogation from assembly regulator necessities or immunity from prosecution. We plan to spend money on the long-term way forward for the corporate while understanding our obligations to the invoice payers.”
The UK authorities mentioned final month that it has “stepped up” preparations to plunge Thames Water into its particular administration regime, whereas signalling it will reject calls for from the collectors to exempt it from key environmental legal guidelines.
Muinín is led by chief govt Ashok Tak, a former banker at Commonplace Chartered, and its chair Simon Phillips, a commodities buying and selling specialist.
Thames Water mentioned it continues “to imagine {that a} sustainable recapitalisation” is in everybody’s curiosity and it’s “progressing discussions on the senior collectors’ plan with Ofwat and different stakeholders”.
Ofwat mentioned: ‘’Our focus is on guaranteeing that the corporate takes the precise steps to ship a turnaround in its operational efficiency and strengthen its monetary resilience to the advantage of clients.”