Former Labour Cabinet minister Lord John Hutton has been selected to become independent chairman of Thames Water if a proposed creditor-led rescue of the financially troubled utility proceeds.
The London & Valley Water consortium announced on Tuesday (20 October) that Lord Hutton would chair a proposed new board overseeing a ten-year turnaround programme, subject to the acquisition and recapitalisation being approved and regulatory requirements being met.
Appointment conditional on rescue deal
Lord Hutton, who served in Cabinet under Tony Blair and Gordon Brown, has been named independent chair-designate rather than appointed as the water company's current chairman. The consortium has also named Mike McTighe as vice-chair-designate.
The creditors say their proposals are designed to stabilise Thames Water, improve its operational and environmental performance and keep the business operating under private ownership. The company supplies water and wastewater services to around 16 million customers.
What is the £10 billion rescue proposal?
London & Valley Water has promoted a rescue package involving approximately £10 billion in proposed new capital, comprising equity and borrowing. Thames Water has previously described a proposal involving £3.35 billion in new equity and up to £6.55 billion in new debt. These are proposed financing arrangements, not a confirmed investment or a government funding commitment.
The consortium's wider plan also involves restructuring existing debts and a proposed ten-year programme of operational improvements. The company remains in discussions with creditors, regulators and other stakeholders.
Deal remains subject to approval
In an update on 16 October, Thames Water stated that its board, Ofwat, other regulators and relevant investment committees had not decided to accept and implement the consortium's proposal. The company warned there was no certainty a final recapitalisation would be agreed.
The proposed appointment of Lord Hutton does not constitute approval of the rescue, nor does it establish government endorsement. The possibility of special administration or other government intervention has not been eliminated.