Thames Water dismisses last-minute rescue bid backed by ex-Lib Dem peer

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.Thames Water has dismissed a last-ditch rescue proposal from a former Liberal Democrat peer working with a little-known monetary providers agency, which claims it could actually unpick the teetering utility’s advanced company construction to higher serve the surroundings.Lord Rupert Redesdale, the previous Liberal Democrat vitality spokesman, has been serving to put together a possible bid for Thames Water from Muinín Holdings, a Mayfair-based funding agency, in response to folks accustomed to the matter.Redesdale is chief government of The Water Retail Firm, a specialist provider of water to companies. Redesdale, a member of the aristocratic Mitford household, joined Muinín as a director final month in preparation for a bid. Nevertheless, on Thursday Thames Water stated the provide had “little credibility or viability to recapitalise the enterprise”, including it was persevering with discussions with its senior collectors a few separate rescue proposal. Water regulator Ofwat is at the moment evaluating a £5bn rescue plan from Thames Water’s collectors, the one provide left on the desk after US personal fairness agency KKR walked away from a bid final month.Thames Water, which is struggling underneath practically £20bn of debt, has not formally reopened its fairness bidding course of and has as a substitute centered on the proposal put ahead by these top-ranking collectors, which embody US hedge funds Elliott Administration and Silver Level Capital.Rupert Redesdale, former Liberal Democrat vitality spokesman, is chief government of The Water Retail Firm © Chris McAndrew/UK Parliament “We’ll take into account all bids put to us,” Thames Water’s chair, Sir Adrian Montague, stated in correspondence printed by a parliamentary committee on Wednesday. Montague revealed that CK Infrastructure and Citadel Water — which each made preliminary bids earlier this yr — had additionally indicated a “potential willingness to re-engage”.He added that an unknown entity referred to as Titanium had approached Thames Water, together with “a person related with the water trade with an overview plan to recapitalise Thames Water by tokenisation of debt however with no or low fairness injected”.Montague was latterly referring to Muinín, though the corporate has determined in opposition to tokenisation, in response to folks accustomed to the state of affairs.The bondholders will even maintain large sway over any bid due to the big quantity of debt that must be restructured.Muinín has lately met members of the creditor group and their advisers. It has additionally held conferences with different stakeholders, together with Thames Water’s union representatives and regulators.It plans to lift new bonds from an funding car chaired by Redesdale referred to as River Water Strategic Investments. This is able to increase as a lot as £500mn in short-term financing to stabilise the utility, with plans for Thames Water itself to later situation an extra £5bn bond to bolster its infrastructure and environmental requirements.Thames Water’s present debt can be shifted exterior the regulated entity and into a brand new construction, the place the assorted lessons of collectors may earn a return from a future inventory market itemizing. Muinín claims that the utility could possibly be valued at £21bn in an IPO in three years’ time. An individual near the bondholders stated that Muinín’s proposal would require their approval to shift their debt right into a “distant” car, which may set off large writedowns, and so is “not one thing that may ever be deliverable and albeit would create contagion”.Redesdale final month dropped his Liberal Democrat affiliation and shifted to changing into an impartial member of the Home of the Lords, as a way to protect his political freedom. He would additionally step down from his government and board position at The Water Retail Firm if a bid proceeded, though he would retain a stake within the enterprise, in response to folks accustomed to the matter. The corporate itself shouldn’t be a celebration to the potential bid.“Our proposed bid is about constructing belief within the monetary stability of Thames Water while additionally closely investing within the surroundings,” Redesdale informed the Monetary Occasions. “The proposed bid is not going to require any derogation from assembly regulator necessities or immunity from prosecution. We plan to spend money on the long-term way forward for the corporate while understanding our obligations to the invoice payers.”The UK authorities stated final month that it has “stepped up” preparations to plunge Thames Water into its particular administration regime, whereas signalling it might reject calls for from the collectors to exempt it from key environmental legal guidelines.Muinín is led by chief government Ashok Tak, a former banker at Commonplace Chartered, and its chair Simon Phillips, a commodities buying and selling specialist. Thames Water added that it continues “to imagine {that a} sustainable recapitalisation” is in everybody’s curiosity and it’s “progressing discussions on the senior collectors’ plan with Ofwat and different stakeholders”.Ofwat stated: ‘’Our focus is on guaranteeing that the corporate takes the appropriate steps to ship a turnaround in its operational efficiency and strengthen its monetary resilience to the advantage of prospects.”