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Thames Water’s senior executives will obtain lavish “retention incentives” as a part of a £3bn emergency mortgage agreed by the utility that’s in search of to stave off renationalisation.
Some executives are in line for “50 per cent of wage; very substantial bonuses” as a part of the mortgage agreed with collectors together with the US hedge funds Elliott Administration and Silver Level Capital, Thames Water chair Sir Adrian Montague advised parliamentarians on Tuesday.
Montague claimed that Thames Water needed to hold paying bonuses to stop rival firms from “choosing off” its greatest workers.
“We now have a bonus scheme to guard our most valuable useful resource, which is the senior administration crew,” Montague advised the cross-party atmosphere choose committee.
The bonuses will likely be paid in three tranches along with their annual salaries and bonus, the MPs have been advised.
Montague, a Metropolis of London veteran, admitted it was an uncommon deal: “That is the primary time I’ve encountered this, I’ve performed a couple of restructurings in my time,” he mentioned. “We’d like this crew to remain.”
Chris Weston, a former British Gasoline govt, was appointed as chief govt of Thames Water in December 2023 and was criticised for taking a £195,000 bonus for his first three months within the job. He’s on a complete pay bundle of as a lot as £2.3mn a yr.
The choose committee listening to comes as Thames Water, the UK’s largest water utility, tries to fend off renationalisation below the federal government’s particular administration scheme. The corporate, which serves a couple of quarter of the nation’s inhabitants, is struggling below the burden of its £20bn debt mountain and is in unique discussions with the non-public fairness agency KKR to take over the enterprise.
The £3bn creditor mortgage — which was challenged in court docket by rival bondholders — comes with a 9.75 per cent rate of interest, plus charges. However Montague argued that the corporate wanted to conform to the deal as a result of Thames Water’s “hair elevating” monetary disaster meant the UK’s largest water utility had simply 5 weeks’ money left at occasions prior to now yr.
“Thames within the final yr has come very near operating out of cash solely. There have been occasions prior to now yr once we had 5 weeks’ liquidity: operating a £20bn company on 5 weeks’ liquidity — truthfully it’s hair-rising,” he advised MPs on Tuesday.
Montague defended the settlement to provide KKR the unique proper to a deal, regardless that Thames Water obtained 5 different bids. “The KKR bid was by far and away the most effective, technically, financially, when it comes to the dedication to offer fairness, they have been forward,” he mentioned.
He added that he anticipated a lot of the board to step down if the £4bn KKR deal is confirmed: “When you’ve got a change answerable for a giant firm like this, you need to anticipate there will likely be large modifications within the board, it might be that the brand new fairness homeowners will need some folks to remain however the expectation is that almost all will step down.”
