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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.

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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.

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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.

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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.

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Good economic news as sunny weather boosted retail sales

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Good economic news as sunny weather boosted retail sales

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.

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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.

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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.

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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%.

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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.

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Former Poundland owner lines up advisers as restructuring looms

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Former Poundland owner lines up advisers as restructuring looms

The former owner of Poundland is lining up advisers to supervise its transition to new shareholders through a court-sanctioned process that will involve store closures and job cuts at the discount retailer.

Sky News has learnt that Pepco Group, which is listed on the Warsaw Stock Exchange, is drafting in FRP Advisory weeks after it struck a deal to sell Poundland to Gordon Brothers.

Industry sources said FRP had been asked by Pepco to act as an observer, with the High Court scheduled to sanction a restructuring plan in the last week of August.

Under the proposed deal, 68 Poundland shops would close in the short term, along with two distribution centres.

More shops are expected to be shut under Gordon Brothers over time, resulting in hundreds of job losses.

Pepco is said to be particularly focused on IT systems which Poundland uses in common with Pepco’s operations in Poland.

Barry Williams, managing director of Poundland, said at the time of the deal’s announcement: “It’s no secret that we have much work to do to get Poundland back on track.

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“While Poundland remains a strong brand, serving 20 million-plus shoppers each year, our performance for a significant period has fallen short of our high standards and action is needed to enable the business to return to growth.

“It’s sincerely regrettable that this plan includes the closure of stores and distribution centres, but it’s necessary if we’re to achieve our goal of securing the future of thousands of jobs and hundreds of stores.

Prior to the deal’s announcement, Poundland employed roughly 16,000 people across an estate of over 800 shops in the UK and Ireland.

Tax hikes announced by Rachel Reeves, the chancellor, in last autumn’s Budget have increased the financial pressure on high street retailers.

In recent months, chains including WH Smith, Lakeland and The Original Factory Shop have changed hands amid challenging circumstances.

In June, Sky News revealed that River Island, the family-owned clothing retailer, was also working with advisers on a rescue plan aimed at averting its collapse.

Pepco and Poundland declined to comment.

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TalkTalk dials up £100m investment from Ares Management

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TalkTalk dials up £100m investment from Ares Management

TalkTalk, the telecoms and broadband group, has secured a £100m capital injection from one of its existing backers in a deal that will relieve the growing financial pressure on the company.

Sky News has learnt that Ares Management has agreed to provide the new funding in two tranches, with the first £60m said to be imminent.

A deal could be announced as soon as Friday afternoon, according to banking sources.

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The funding agreement comes amid discussions between TalkTalk and its bondholders about a potential break-up of the company, which would involve the sale of its consumer arm and PXC, its wholesale and network division.

Those disposals are now not expected to be launched in the short term.

One person close to the situation said that in addition to Ares’s £100m commitment, TalkTalk had raised £50m from two disposals in March and June, comprising the sale of non-core customers to Utility Warehouse.

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There was also an in-principle agreement to defer cash interest payments and to capitalise those, which would be worth approximately £60m.

TalkTalk has been grappling with a strained balance sheet for some time, and recently drafted in advisers from Alvarez & Marsal, the professional services firm, to assist its finance function.

The group has more than 3m broadband customers, making it one of the largest players in the UK market.

It completed a £1.2bn refinancing late last year, but has been under pressure from bondholders to raise additional capital.

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Last month, the Financial Times reported that BT’s broadband infrastructure arm, Openreach, could block TalkTalk from adding new customers to its network in an escalating dispute over payments owed to BT Group.

TalkTalk, which was taken private in 2021, and Ares both declined to comment.

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