Thames Water creditors have hired legal advisers as a precautionary measure against potential nationalisation, as incoming Prime Minister Andy Burnham is reportedly planning to place the utility into a special administration regime when he takes office on 20 July.
The London & Valley Water consortium, holding £17bn of Thames Water's £21bn debt, is pushing for a £10bn takeover to avoid state control. The group, comprising fund managers including Apollo Global Management and Elliott Management, has appointed Pallas Partners to act if the government rejects their bid. Environment Secretary Emma Reynolds wrote to Ofwat expressing concerns that the creditors' recovery plan does not sufficiently protect consumers or the environment.
Thames Water, which warned it will run out of money by year-end without a deal, reported pre-tax profits of £226.4m for the year to March 31. The company met only 55% of regulated targets in the period, while CEO Chris Weston's pay rose to £1.16m and management bonuses increased to £4.09m.