Another step in the process of attracting new equity for Thames Water was completed on 5 December as prospective purchasers submitted financing proposals to the company and its advisor Rothschilds.
Six parties made offers, according to press reports. Two of these have been made public. Castle Water, said to be backed by the William Pears Group, said that it could offer £4bn to restructure and relist Thames on the London Stock Exchange if its bid were successful.
Covalis Capital is said to be bidding with Suez. The offer involves £1bn up front, plus another £4bn from planned asset sales, which may include discrete regulatory assets and refinancing. The new owner would then list the remainder of Thames Water on the stock market.
Suez would act in an advisory role, but would not own any shares. Suez is familiar with UK water, having owned Northumbrian Water. It sold 75% of its stake in 2003 and the remainder in 2005. According to the press, the Government would be offered a golden share in Thames, giving it a seat on the board and other rights. Covalis’ bid is not thought to depend on bill hikes as steep as those requested by Thames Water’s current management. According to sources, Covalis' offer will not involve ‘haircuts’, or valuation write-downs in the class A bonds, and will offer an agreed restructuring solution to B bondholders. The class B group of bondholders would be highly supportive of such a deal, according to one source.
CKI and Brookfield are also said to have been interested in bidding for Thames.
• Thames last week appointed Julian Gething on an interim basis to a newly-created role of chief restructuring officer, to provide specialist advice as the company continues its balance sheet recapitalisation and equity raise processes. Gething will sit on the board and executive. He is a partner and managing director at AlixPartners and has 35 years’ experience in delivering complex debtor side financial restructuring.
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