Thames Water creditors line up McTighe to spearhead rescue deal
One of Britain’s top corporate troubleshooters is being lined up to spearhead a multibillion pound rescue of Thames Water after the company’s preferred bidder walked away.
Sky News can reveal that Mike McTighe is working with Thames Water’s largest group of creditors on a plan to restructure the company’s debts and inject new funds in the hope of avoiding nationalisation.
Mr McTighe, whose portfolio of chairmanships includes the Daily Telegraph’s publisher and Openreach, BT Group’s infrastructure arm, is said to have begun meeting stakeholders in recent weeks.
If the Class A creditors’ proposal is successfully executed, Mr McTighe would probably take over as chairman of Thames Water, according to people close to the situation.
Mr McTighe has earned a reputation as a turnaround expert, but also chairs companies such as IG Group, the financial spreadbetting company, and Together Financial Services, the non-bank lender.
The recruitment of such a prominent businessman to lead the lenders’ efforts will add momentum to a plan which increasingly looks like the only alternative to landing British taxpayers with a vast rescue bill.
The group’s proposal would include swapping several billion pounds of Thames Water’s debt for equity, as well as injecting substantial new funding.
Thames Water is Britain’s largest water utility, serving more than 15 million customers.
However, decades of poor performance and financial engineering have left it carrying close to £20bn of debt and facing hundreds of millions of pounds in regulatory fines.
Pic: iStock
The Class A creditor group, which represents about £13bn of Thames Water’s borrowings, includes some of the world’s most powerful investors.
Elliott Management, the New York-based firm, is among those exposed to a collapse that could leave Thames Water in a special administration regime (SAR) – a government-sponsored insolvency process aimed at providers of key infrastructure services.
Other members of the creditor group include institutions such as Aberdeen, Invesco, Apollo Global Management and M&G.
A source close to the creditor group said: “We have done a huge amount of diligence and work on a plan to turnaround Thames.
“We are the only bidders who will be able to complete this transaction within the necessary timeframe.”
The fact that Mr McTighe has been persuaded to join their effort will revive hope that a private sector solution to Thames Water’s crisis can still be found.
On Tuesday, the company announced that KKR, its preferred equity partner for the last two months, had decided not to proceed with a deal.
Sky News revealed that talks between Henry Kravis, the KKR co-founder, and Sir Keir Starmer’s top business adviser had taken place over the weekend in an effort to prevent the deal from collapsing.
Money latest: ‘Death by 1,000 increases’ – three major lenders push mortgage rates up
It was unclear on Tuesday whether CKI, the Hong Kong-based company which controls swathes of UK infrastructure assets, might seek to revive its interest in a deal with Thames Water.
Sir Adrian Montague, the company’s current chairman, said: “Whilst today’s news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal.”
In recent weeks, Thames Water has been fined a record £123m by Ofwat for separate transgressions relating to dividend payments and environmental pollution, and found itself embroiled in a bitter political row over whether retention payments it had lined up for executives were classified as bonuses.
The company has also been at the centre of a legal battle which culminated in the Class A group of lenders providing a £3bn emergency loan in March following a court challenge launched by a smaller creditor group.
The government described Thames Water as “stable” on Tuesday, but said it was ready to step in and take control of the company if required to.
The company effectively faces a deadline of late July to finalise a rescue deal because of a referral of its five-year regulatory settlement to the Competition and Markets Authority.
A spokesperson for the Class A creditors declined to comment on Tuesday evening.
Retail sales grew in June as warm weather boosted spending and day trips, official figures show.
Spending on goods such as food, clothes and household items rose 0.9%, the Office for National Statistics (ONS) said.
It’s a bounce back from the 2.8% dip in May, but last month’s figure was below economists’ forecast 1.2% uplift as consumers dealt with higher prices from increased inflation.
Money blog: The odd rules that could land you with a big fine on holiday
Also weighing on spending was reduced consumer confidence amid talk of higher taxes, according to a closely watched indicator from market research firm GfK.
Retail sales figures are significant as they measure household consumption, the largest expenditure in the UK economy.
Growing retail sales can mean economic growth, which the government has repeatedly said is its top priority.
Please use Chrome browser for a more accessible video player
What does ‘inflation is rising’ mean?
Where have people been shopping?
June’s retail sales rise came as people bought more in supermarkets, and retailers said drinks sales were up.
While hot and sunny weather boosted some brick-and-mortar shops, the heat led some to head online.
Read more from Money:
Satellite tracker Spaceflux reaches lift-off with £5m funding boost
Trade war uncertainty prompts halt to eurozone rate cuts
Non-store retailers, which include mainly online shops, but also market stalls, had sold the most in more than three years.
Not since February 2022 had sales been so high as the Met Office said England had its warmest ever June, and the second warmest for the UK as a whole.
The June increases suggest that the May drop was a bump in the road. When looked at as a whole, the first six months of the year saw retail sales up 1.7%.
Filling up the car for day trips to take advantage of the sun played an important role in the retail sales growth.
When fuel is excluded, the rise was smaller, just 0.6%.
Welcome news
Despite lower consumer sentiment and more expensive goods, consumers are benefitting from rising wages and are cutting back on savings.
The ONS lifestyle survey – backed up by hard data like the Bank of England’s money and credit figures – shows that households have rebuilt their rainy day savings and are cutting back on the amount of money they squirrel away each month.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike