Thames Water creditors line up McTighe to spearhead rescue deal

Sky News

4 days ago

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 15m 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.
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.
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 up 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.