Thames Water's lenders have revealed they are considering offering a 'golden share' to the Government as part of a revised rescue deal to stave off nationalisation of the stricken supplier. The consortium of lenders bidding for the UK's biggest water firm, which serves around 16 million customers across London and the South East, said it remains in talks with regulators over a possible deal, with 'material improvements' being considered on its previous £10 billion proposal to appease government concerns.
Revised Proposal and Golden Share
London & Valley Water (L&VW), the consortium of creditors, stated that it 'recognises that the new Government, led by Prime Minister Andy Burnham, would like to see water companies create greater local public control and involvement to strengthen accountability for protecting investment and delivering improvements.' The consortium has evaluated potential new local public control supervisory structures for Thames Water, which could include a 'golden share' for the government, giving the Secretary of State the power to veto major asset sales, foreign takeovers, or changes to the company's constitution.
Government Concerns and Nationalisation Threat
The move comes amid reports that Andy Burnham could temporarily nationalise the debt-laden company. Burnham has already signalled his intention to bring in a 10-year plan to renationalise the water industry, saying reform is needed to put the public interest first. The creditors' rescue plan is seen as the final realistic option to avoid Thames Water being placed into a special administration regime after a previous rescue deal with US private equity giant KKR collapsed in May last year.
Revised Plan Details
L&VW said the new supervisory structure would give 'enhanced local representation for local authorities and regional leaders.' The consortium was sent back to the drawing board after former environment secretary Emma Reynolds last month warned she did not believe their £10 billion plan for Thames Water goes far enough to protect customers or the environment. Former farmer minister Dame Angela Eagle was recently appointed as the new Environment Secretary by Mr Burnham.
Creditors' Statement
A spokesman for London & Valley Water said: 'Thames Water is a company of national importance, and we look forward to working with the new Government to secure a long-term solution which delivers greater public control and the best outcome for customers. We continue to believe that the L&VW plan is by far the fastest and most reliable route to solving Thames Water's complex problems and improving outcomes for customers and the environment, and achieves this without any government funding or cost to taxpayers.'
Under the proposed plan, customers would have strong protections, regulators and government would have enhanced oversight, and there would be greater controls to ensure Thames Water delivers the record investment needed to improve environmental and operational performance.
