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A board in waiting
The consortium of creditors pursuing a rescue bid for Thames Water has announced four proposed non-executive directors who would take control of the company’s board if its acquisition and recapitalisation plan is approved.
London & Valley Water (L&VW), a group of around 100 financial institutions holding more than £17bn of Thames Water’s £21bn debt, has put forward Mike McTighe, who would become chair, alongside Liz Barber, former CEO of Yorkshire Water; Clive Selley CBE, former CEO of Openreach; and Dame Bernadette Kelly, former permanent secretary at the Department for Transport. The proposed appointments remain conditional on L&VW’s plans being approved and the completion of Ofwat’s director onboarding process.
“Credible names which can inspire confidence”
The four proposed directors reportedly bring significant relevant experience. McTighe, who has chaired Openreach for the past decade, is leading L&VW’s proposed governance overhaul. Barber brings more than 30 years in UK regulated utilities and direct experience of senior leadership in the water sector. Selley oversaw a major capital investment programme at Openreach connecting more than 30 million premises. Kelly’s background spans public policy, regulation, infrastructure planning and corporate governance at the highest levels of government. All four have been involved in L&VW’s due diligence and the development of its Performance Improvement and Turnaround Plan over the past twelve months. Investment director Russ Mould of AJ Bell described them as “the sort of credible names which can inspire confidence in the company’s future in private hands.”
A ten-year turnaround plan
If the acquisition proceeds, L&VW says the new board would oversee a decade-long programme focused initially on the operational foundations of the business; power resilience at critical sites, sewer cleaning, mains replacement, and tackling pollution and leakage. Proposed investors would commit to taking no dividends for ten years, or until Thames Water is returned to the public markets via a London Stock Exchange listing, with profits reinvested in the business. The governance structure would also incorporate greater involvement from local authorities and regional leaders, in line with the government’s stated objective of more place-based oversight of the water sector.
Nationalisation threat looms large
The announcement is explicitly designed to head off the possibility of Thames Water entering a special administration regime (SAR), a form of temporary nationalisation, which Prime Minister Andy Burnham has indicated he supports, calling for “greater public control” of the company. The prime minister has also escalated his warnings to water companies, describing bill payers as not being a “blank cheque,” following Ofwat’s recent approval of further bill increases. Thames Water has estimated the cost of a SAR to the taxpayer at £2bn. L&VW has simultaneously hired litigation specialists Pallas Partners to strengthen its legal position should nationalisation be pursued.
Critics unconvinced by “cosy stitch-up”
The announcement drew sharp criticism from the public ownership campaign group We Own It. Director Cat Hobbs dismissed the proposals as “a cosy stitch-up that has nothing to do with the interests of the 16 million people who depend on Thames Water,” describing the board changes as “nothing more than a reshuffling of chairs on the deck of the Titanic.” The creditors’ plans have also faced political headwinds since June, when the then environment secretary Emma Reynolds wrote to Ofwat voicing concerns about the terms of the deal. The outcome of the government’s deliberations on Thames Water’s future remains one of the most significant unresolved questions facing the UK water sector.