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Hong Kong firm in lead to buy Thames Water

Hong Kong’s CKI, an infrastructure company is reportedly a leading contender to buy Thames Water if the heavily indebted company collapses in coming weeks, according to the Times.

CKI already invests in power and other utility companies in the UK, and is lining up to acquire the water and sewerage supplier if it enters a special administration regime (SAR). They are in competition with Thames Water’s class A creditors, who hold the bulk of the company’s senior debt and are in talks with the regulator, Ofwat, about a deal to inject capital into the company, which has £17.7bn of net debts and regulatory gearing of 84.4%. 

Government avoiding nationalisation

Meanwhile, in a development first reported by Sky News, environment secretary Steve Reed has signed off the appointment of FTI Consulting to advise on plans for Thames Water to be placed into a SAR. Reportedly the appointment signals that FTI is the frontrunner to act as administrator if the government enacted a SAR, although a court would ultimately approve such a step.

With the Treasury threatening that a potential £4bn bill from the SAR could be forced on the Department for the Environment, Food and Rural Affairs (Defra), the government has been trying to avoid going this route. However, the government’s Water (Special Measures) Act contains a provision for SAR costs to be recouped from customer bills further down the line.