The group of lenders which want to take control of Britain’s biggest water utility and keep it out of government ownership are to pledge to the industry regulator that they will not offload the company before the end of the decade.
Sky News has learnt that Thames Water‘s largest creditor group, which account for the bulk of the company’s £20bn debt pile, will promise to retain ownership until it is in a sufficiently healthy position to attain a stock market listing.
The commitment to retain ownership until around 2030 is noteworthy because that is the date when the next regulatory price-setting cycle – known as an Asset Management Plan – is due to come into effect.
The creditors’ pledge will form part of a package to be submitted to Ofwat by the Class A creditors as soon as this week.
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It is designed to dispel any suggestion that the group of lenders might seek to offload Thames Water midway through a turnaround plan aimed at putting the company back on a sustainable long-term footing.
The creditors will also commit to not paying a dividend to shareholders for the length of the transformation plan or its return to the stock market, according to an executive at one of the participating funds.
Earlier this month, the London & Valley Water consortium – which includes Elliott Management and Apollo Global Management – set out proposals for a £20.5bn investment and turnaround plan.
Its focus on reducing pollution incidents and leaks – which have triggered hundreds of millions of pounds in fines for Thames Water and destroyed the company’s reputation – is aimed at persuading Ofwat and the government that the investors have a viable plan to run one of the country’s most important businesses.
Thames Water has more than 16 million customers, accounting for more than a quarter of Britain’s population.
