CK Infrastructure, the owner of Northumbrian Water, has re-entered the bidding process for Thames Water and approached the water sector regulator Ofwat to say it is ready to submit its own rescue package, according to a report in The Sunday Times at the weekend.

The newspaper cites a letter seen by the Sunday Times sent by Andrew Hunter, deputy managing director of the Hong Kong based infrastructure group to Ofwat chair Iain Coucher to insist that it would make an offer for the heavily indebted water company if there was a competitive bidding process, or if Thames was taken into temporary public ownership via the special administration regime (SAR).

The Times quotes Hunter as saying in the letter that CKI would “focus on the long-term future of Thames and not on preparing for a stock market flotation by 2030.”

The plan submitted by the company’s existing Class A creditors as the London & Valley Water (LVW) consortium at the beginning of October which is currently under consideration by Thames Water and Ofwat states:

“The new shareholders will commit not to sell the business prior to 31 March 2030 to allow for full focus on a stretching turnaround.”

The Sunday Times article quotes the letter as saying:

“If CKI are given the opportunity to bid and if our offer were to be successful, we would be committed to investing whatever it takes over the long term, not just on day one or during a relatively short ‘pre -exit’ window that the creditors seem to be limiting themselves to.”

According to the newspaper, Hunter has also told Ofwat that CKI would not seek special treatment on future penalties and fines as sought by the LVW consortium and quotes him as saying that any concessions would “further damage the already very fragile trust in the regulatory regime”.

Earlier this year CKI was previously in the bidding process before Thames Water named private equity firm KKR at the end of March as its preferred partner for the next stage in its equity raise process. KKR and CKI were among six parties who submitted proposals for an equity raise to Thames Water to put the company in a more secure financial position.

However. KKR subsequently pulled out of the bid at the beginning of June, with media reports citing “political risk - the ongoing negative narrative around the water industry”as one of the reasons for KKR’s withdrawal.

“Stricken utility” is threatening “to appeal to the competition regulator for a better deal"

A separate article in the newpaper in Sepember suggested that Thames Water had set a itself a deadline of a month to reach an agreement with Ofwat to “relax the penalty regime” for missed performance targets. Thames is due to announce its decision on Wednesday whether to take its deferred appeal against Ofwat’s Final Determination to the Competition and Markets Authority.

The “stricken utility” is threatening “to appeal to the competition regulator for a better deal, which would stretch the uncertainty over its future into next year”, the article says.

“If the A-Team rescues Thames Water, we shouldn’t give them an easy ride"

A third article in the Sunday Times at the weekend by Business Editor John Yeomans commenting on the current situation entitled  “If the A-Team rescues Thames Water, we shouldn’t give them an easy ride” asks:

“The creditors are lobbying for special treatment but what’s to stop every other water company asking for the same leeway, undermining investor confidence?”

He also raises the issue of the Special Administration Regime asking “what is the point of having a SAR process... if ministers are too afraid to use it.

“If we go too easy on Thames’ new owners now, we could be in an even bigger mess by 2030,” the article concludes.