A key board member of Thames Water, the crisis hit water provider and sewerage firm, has stepped down as it struggles to stay afloat.
Michael McNicholas, who represents Canadian pension fund Omers on the board, is stepping down immediately, Thames Water said. The move is seen as a sign that investors are set to ditch their stakes in the troubled water company.
Omers, or Ontario Municipal Employees Retirement System, is the largest Thames Water shareholder holds a near 32 per cent stake in Kemble Water, owners of Thames, the UK’s biggest water firm.
The resignation move is expected to trigger more of the company’s shareholder representatives to quit the board, according to SkyNews. The shareholders are baulking at providing more than £3bn to help steady the utility firm and help upgrade its infrastructure.
It is unclear how many more shareholders, which include Chinese state-owned firms and the Abu Dhabi Investment Authority, are expected to exit the board.
“Thames Water continues to meet water regulator Ofwat’s expectation that independent non-executive directors form the largest single group on the Board,” the water provider said in a statement.
Thames Water said the departure “follows the announcement made on 28 March 2024 that, based on the feedback provided by Ofwat to Thames Water to date, the regulatory arrangements that would be expected to apply to Thames Water . . . make the [business] plan uninvestible”.
The company said in March that it had until late next year to secure more funding or risk nationalisation.
Britain’s privatised water industry has come under scrutiny as sewage spills have risen despite owners continuing to be paid substantial dividends, loading the companies with debt.
Public outrage over pollution and the prospect of higher bills has put the regulator Ofwat under pressure to ensure consumers get better value for money, but investors say they still need to make returns, resulting in a stand-off over Thames Water.
Kemble Water Holdings, owners of Thames, has already said it has begun to default on its debts. Government officials have already drawn up an emergency plan to keep the essential public service operating. Shareholders reportedly face losing up to 40 per cent of their capital while the government takes on the cost, put at £16bn of cleaning up its financial balance sheet.
Specialist US lenders are reportedly buying up debt in Thames Water gambling that losses that are likely to occur when Thames is restructured will be less severe than feared.
