Key facts
- Thames Water creditors offered the government a 'golden share' and local oversight to prevent nationalisation.
- The 'golden share' would grant the government veto power over major decisions like mergers.
- Lenders propose increased involvement for local authorities in the company's governance.
- A special administration regime, if enacted, could cost taxpayers an estimated £4bn.
- The revised rescue plan includes a 10-year dividend freeze for investors and new funding.
- Thames Water has warned it may run out of cash by November.
Thames Water's main lenders are offering the government a 'golden share' and increased control for local authorities in a bid to prevent the troubled supplier from being nationalised. The consortium, London & Valley Water (L&VW), which holds £17bn of the company's £21bn debt, has prepared a revised rescue plan. This plan includes a 10-year dividend freeze for investors and hundreds of millions in new funding, aiming to avoid a special administration regime that creditors estimate could cost taxpayers up to £4bn.
The government recently rejected a previous rescue proposal. Sources close to the creditors indicated they would pursue full payment of outstanding debts in the event of nationalisation. The 'golden share' would grant the government veto power over major decisions, such as mergers, while greater involvement for local authorities is also proposed, mirroring arrangements in Greater Manchester.
Thames Water, which serves 16 million customers, has warned it could run out of cash by November and recently announced a hosepipe ban. The company was previously fined £122.7m by regulator Ofwat for breaches related to sewage spills and shareholder payouts. A government spokesperson stated that while Thames Water is financially stable, they are prepared for all eventualities, including a Special Administration Regime if necessary, and will act in the national interest.