Thames Water’s bosses ought to eat “humble pie” over a failed takeover course of final 12 months and let different corporations bid for it, in accordance to a Hong Kong funding group angling to purchase the troubled water firm.
CK Infrastructure (CKI), which is owned by Hong Kong’s richest man, Li Ka-shing, has already acquired Northumbrian Water and has been attempting to launch a bid for Thames since February final 12 months.
Andrew Hunter, CKI’s co-managing director, advised the Guardian he was “frustrated” at being shut out of the method to save the debt-laden water firm, which has now been locked in talks with its own lenders since final summer season. “My goodness, it’s been going on forever,” he stated.
Thames has been attempting to stave off monetary collapse for more than two years because it struggles below the burden of £17.6bn in debt, constructed up over many years since privatisation. Bosses tried to promote it final 12 months however confronted embarrassment when their most popular bidder, KKR, pulled out of the deal on the final minute.
Now it’s negotiating with collectors over a separate £10bn rescue plan that might contain paying off the hundreds of millions of pounds-worth of fines for leaks and air pollution, in alternate for the corporate not falling right into a government-handled administration, in impact a temporary nationalisation.
CKI has previously expressed interest in shopping for the corporate and wrote to the water regulator, Ofwat, in October to insist that it will bid for Thames if there was a aggressive sale course of. Asked if the watchdog ought to intervene to open up the bidding, Hunter stated: “I most definitely think they should.”
“It’s hugely important that Thames Water is owned and operated by an experienced, knowledgeable company,” he added. “I would be encouraging government and Ofwat to have a process that brings about that result.
“The direction of travel at the moment is bringing about a very unfortunate result, in my view,” Hunter stated, casting doubt on Thames’ lenders – which embody the US hedge funds Elliott Management and Silver Point Capital – as appropriate long-term house owners of the corporate.
“They’re a mixed bag of traditional creditors and US distressed debt hedge funds,” he stated. “They are good at what they do but they don’t run UK water companies.”
CKI has owned Northumbrian Water since 2011 and has staked a lot of its declare to shopping for Thames on its expertise working that firm, which serves 2.7 million clients in north-east England in contrast with Thames’s 16 million in and round London.
It additionally has a protracted monitor report in UK vitality as proprietor of UK Power Networks and Northern Gas Networks, however some MPs have raised considerations about hyperlinks to China, with former Conservative chief Iain Duncan Smith beforehand saying on social media {that a} CKI acquisition “should be avoided at all costs”.
“I take a little bit of issue with the characterisation [of CKI] as Chinese,” Hunter stated. “CKI was founded in Hong Kong, under British rule, I hasten to add, and and it is now listed in Hong Kong and listed in London.”
“I can’t control the headlines,” he added. “We are well respected in this country and we’re a very large inward foreign investor.”
CKI had beforehand been eradicated from the method regardless of tabling a multibillion-pound proposal, as Thames selected KKR as a most popular bidder and entered unique talks with the corporate earlier than it will definitely pulled out.
Hunter stated different potential consumers ought to be given entry to the due diligence data given to KKR on the time. “My frustration stems from the fact that we’ve never been given the information and allowed to make an offer,” he stated.
He added that it “doesn’t reflect well” on Thames’ bosses that the funding firm nonetheless walked away. “When you grant exclusivity to someone and they walk away, there’s a little bit of humble pie to be eaten. They’ve got to swallow their pride and say: ‘Look fellas, we need to start again.’”
However, Hunter stated that whereas CKI had spoken to Ofwat over the matter, he had not spoken personally with Emma Reynolds, the surroundings secretary, who would additionally want to approve any potential rescue deal.
A spokesperson for Thames’s collectors declined to remark.
